GM Building: NYC icon
Developer Harry Macklowe has agreed to sell New York City’s General Motors Building along with three other Manhattan skyscrapers to a consortium led by Boston Properties for $3.95 billion (€2.52 billion). The buyers group also includes Goldman Sachs and investors from Qatar and Kuwait.
The purchase of the four properties, which is being funded by $1.47 billion in cash and $2.47 billion of fixed-rate debt, will enable Macklowe Properties to pay off $1.4 billion of debt it owes Fortress Investment Group. Macklowe took on the loan from Fortress last year before the credit crunch hit in order to help finance the acquisition of seven New York properties from Equity Office Properties Trust.
The purchase by a real estate investment trust comes at a time when some health is returning to the sector. Shares in the major property companies were battered throughout 2007 reflecting turmoil in subprime property. However, ten straight months of share sell-offs last year have been replaced by three consecutive inflows of capital in the first three months of 2008 – the last period for which data is available.
The iconic General Motors building is on Fifth Avenue directly across from Central Park, and houses studios for the CBS network, the FAO Schwartz toy store and the new Apple Store with its giant glass cube entrance. The 50-story tower built in 1968 has about 2 million square feet of rentable office space.
Boston Properties is a publicly traded company led by publisher and real estate baron Mortimer Zuckerman. Though the company declined to disclose the price it paid for GM building alone, it did say that the debt portion of that purchase is $1.9 billion. That means the transaction has set a new record for a US office building, trumping the $1.8 billion paid in 2006 for another office located on 5th avenue.
The other buildings sold by Macklowe are a 39-story tower at 540 Madison Avenue, a 23 story tower at 125 West 55th Street and the 44-story Two Grand Central Tower.