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Category ArchiveRXR Realty

Packing a Punch: Mike Maturo Talks RXR’s New JV and Worldwide Plaza

Deal-making is bloodsport.

Thankfully, Mike Maturo, the president and CFO of RXR Realty, has come prepared.

“On Saturdays, I box,” Maturo, 56, told Commercial Observer from his office at 75 Rockefeller Plaza. “I train with a professional mixed martial arts fighter, and once a week I go into the ring, which is fun as long as I don’t go too far down in the age group. Because when I fight the younger guys, it gets a little rough.”

That’s on top of the Pilates he does three times per week. Oh, and the basketball he plays on Sundays before church. (Maturo has a license to marry people. He already has one ceremony under his belt and another in the pipeline.) Finally, a Peloton bike is his latest personal acquisition, and he’s gearing up to compete against Scott Rechler, RXR’s founder and CEO, in online classes.

And that’s just what he does in his free time.

By day, it’s a different kind of competition, as he makes sure to dot all the i’s and cross all the t’s as the finance head of a multibillion dollar real estate empire.

Right now, RXR has what Maturo describes as, “big things in our pockets.” One of those big things is a new joint venture with a Canadian pension fund (Maturo wasn’t at liberty to name it quite yet), adding even more capital power to the real estate powerhouse that is RXR.

Commercial Observer: What can you tell us about this new joint venture?

Mike Maturo: We’ve been actively lending, but I think you’ll see us penetrate the market far more deeply in that respect soon. We have partnered with a Canadian pension fund and formed a joint venture, which will seek opportunities for structured finance investments in the New York metro region. It’s starting with $300 million of equity—with the ability to expand over time—and will invest in a cross section of real estate including office, residential, industrial and retail.

Where in the capital stack will you play?

The joint venture will generally make mezzanine debt and preferred equity investments. Most will involve complex capital structures where we can use our business and real estate skillsets to mitigate risk.

Why is now the right time to increase your lending activities?

The investment market still has this bid-ask gap so we see it as a good opportunity to participate in the lending market. There are good developers and sponsors out there who are smaller players but have a good history in their respective markets and have difficulty accessing both equity and debt capital. We can play into their situations.

We can also write large checks; our size goes from $50 [million] to $500 million. Our deal with [Extell Development Company’s] Gary Barnett [for One Manhattan Square in 2016] was $465 million, and so we don’t shy away from that [size of loan]. We have a big appetite not only in this venture that I’m referring to but from our broad base of investors to do co-investment in these types of transactions. So I think that’s another competitive advantage for us.

If the investment activity on the acquisition side starts to heat up you’ll see us actively playing here. That could also be in combination with banks and other players. It’s going to be active and diverse and on the lending side you’ll see us play across multiple products.

More so than previously?

When we were a public company [prior to 2007] we were very pigeonholed in one sector and that never made sense to us because we’re so deep in this region. We have over 1,500 tenants so think about how many companies we’re touching on a daily basis. We all live here, we raise our kids here, we participate in the community here. We’re really ingrained in these markets. We see a lot across multiple sectors so it makes sense for us to participate. We understand what tenants and customers want, so it’s easy for us to underwrite the market and the economics.

How would you describe your lending appetite?

We have a pretty wide view and we don’t restrict ourselves. Would we do hotels? Probably not. But if we found something we really liked—because we have underwritten hotels in the past—we wouldn’t shy away. But, I think you’ll see us lend more on residential, office, mixed-use and industrial properties.

And you’ll continue to target the New York metro area?

Yes, but we’ll be casting a wider net. We’re looking at a lot of opportunities in the boroughs. We have one deal in Westchester, [N.Y.] where we’re providing construction financing to a developer who is building a St. Regis-flagged gated super luxury condominium community. The project is very similar to our very successful Ritz Carlton Residences project on Long Island. We are lending  both the senior loan and the mezzanine loan. The developer selected RXR because of our experience developing the Ritz Carlton project and determined RXR could be value-add to the development. We are also providing recapitalization financing in the form of preferred equity to a three-property portfolio located in Manhattan and Long Island City.

How busy a year was 2017 for you?

We had over $5 billion in new financings last year so we were very active on that side of the business. On the investment side we weren’t so busy in terms of actual transaction closings, but we bought Worldwide Plaza with SL Green [The duo purchased a 48.7 percent stake in the trophy asset with an agreed-upon property value of $1.73 billion], which is obviously a very big transaction. We underwrote probably $30 billion in transactions but in the market there’s a reasonable bid-ask gap that’s been there for the past 18 months or so. So while we were active looking at deals, we only transacted on buying One Worldwide Plaza.

We’ve been very active on the development and redevelopment side, including this building at 75 Rock. We continue to work on Pier 57, which is a redevelopment of the site for Google and in Brooklyn we have a big redevelopment in the Navy Yard. That will be a primary focus this year, in terms of getting the redevelopment up and running. We also have a residential portfolio that was very active last year. We finished one project in downtown Stamford, [Conn.], that we’ve started to lease, and we have major projects in [other parts of New York including] Westchester, Downtown New Rochelle, Downtown Yonkers and Glen Cove in Long Island. Plus we’re developing the second phase of our North Hills Ritz Carlton Residences project. The first phase sold out last year. So, we’ve been very active across the board.

How did the Worldwide Plaza acquisition come about last October? And why was it the right time for the deal?

It’s a long story and somewhat complex, but we actually had the contract on that building when it originally sold to NYRT [New York REIT] and through a whole confluence of events it didn’t go our way. But we had significant interest in the building for a long time. When NYRT got into its issues [its gradual winding down via a liquidation plan] I think their plan was more geared toward a liquidation than having an ongoing business. We were a natural player to step in and work through the acquisition with them because we had a very good understanding of the asset. We had actually looked to work with SL Green on a potentially broader purchase of assets in the NYRT portfolio beyond just Worldwide Plaza, and that’s how the relationship with SL Green with respect to the property came about.

What was the property’s biggest selling point?

It’s a great asset and one that would be very difficult to build again—the bones of the building are very strong. The West Side of Manhattan continues to flourish—it’s not part of Hudson Yards, but it’s coordinated into that West Side area that’s getting more popular and more populated on both the residential and office sides. We think as a long-term asset there’s potential there with some of the tenant base that may want to extend and renew, and there’s also potential with the retail. So there’s opportunity to create value, and honestly we’re buying at a good price per foot. We bought it in the upper $800s per square foot, and when you look at pricing in New York and the replacement value for a building of that nature, it feels like a solid deal. It was attractive in terms of what our investors are looking for: a good current yield with potential for upside in an iconic building. So, we checked a lot of boxes.

Was there a lot of competition for the $1.2 billion refinance of Worldwide Plaza?  

We went out to a small crowd because in the [commercial mortgage-backed securities] world the pricing isn’t that different, everyone prices off the same model. So we went to our relationships—a handful of CMBS players we knew could execute quickly. Everyone had a strong relationship with Goldman Sachs, so it came together pretty fast, as opposed to 1330 Avenue of the Americas where we went out and had a distribution through a brokerage process. It wasn’t that complex a deal, the building is fully leased long-term and NYRT had some timing requirements that we needed to meet so I think we were done within 60 days—in today’s world that’s quick.

Why was CMBS the best execution?

At that particular time, the bid in the CMBS market was very strong and it’s a very large loan. So, in order to execute that size of loan, the CMBS market tends to be more favorable for that. That being said, we’ve done billion-dollar loans in the bank market, too. But it just seemed right. And remember we had three parties—RXR, SL Green and NYRT—everyone had to agree on CMBS as the best execution.

Are you eyeing any other key acquisitions?

We have our fingers in the mix of a bunch of things but we look for opportunity. Scott [Rechler] and my other partners are always out in the market speaking to people. I don’t want to name any specific buildings [laughs], but we keep a good chart of what’s going on out there and where there could be potential for trading.

Are sellers becoming more realistic in terms of the prices they’ll sell at?

It’s interesting. If you look at it, we’ve already had a five to 10 percent reduction in valuations in New York City. But what you saw last year was a lot of refinancings. On 237 Park [Avenue] we surveyed the market and once we put New York Presbyterian Hospital in there we did the [$850 million June 2017] refinancing because we didn’t really like what we saw in terms of the market for investment sales. But if you look through to the valuations that underlie the refinancings, you can see that valuations that were done for these refinancings reflect that decrease in value. If I had to guess, I’d say that sellers will move more toward those values than the buyers moving up to the higher values. But, we’ll see what happens.

You refinanced 1330 Avenue of the Americas earlier this year with a $285 million loan from DekaBank. What was Deka’s competitive edge?

We saw a very strong bid for that deal; it’s a very strong asset that places well on Sixth Avenue, and it’s the type of asset that—in today’s market—lenders are attracted to. They see upside in terms of the [net operating income], and it’s a solid building that always performs well. Deka came in a little ahead of the pack. It’s interesting, in deals like this there’s always someone who has a feel for the building. Deka is actually in the building, and I think that makes a difference because they see how the building is operating on a day-to-day basis. So, they were pretty aggressive on the deal.

Did the competition for that financing include many foreign capital sources?

Yes, it was really across the board. Even alternative, private equity lenders are bidding into assets of that nature. We had foreign banks, we had foreign lenders, and we had the big U.S. banks. I think—particularly in today’s market—it’s desirable for a lender to get an asset like that in their portfolio. It was an easy deal to get done from an attraction standpoint.

And the Starrett-Lehigh Building’s debt refinance will be coming up soon, right?

The loan is due in June, and we’re in the early stages of the process. We will be looking at both floating-rate and fixed-rate options. We’ll be exploring floating-rate CMBS as well as a bank deal and we’ll likely look for five to seven years of term. That will be a very large loan, probably $1 billion-plus.

20180130 michael maturo 083 Packing a Punch: Mike Maturo Talks RXRs New JV and Worldwide Plaza
Mike Maturo. Photo: Sasha Maslov/ For Commercial Observer

Google is reportedly in talks to lease a substantial amount of space at Starrett-Lehigh. How are those talks going?

They’re going. It’s very exciting. If you look at what Google is doing, it makes sense. They’re building up their presence, and that building has a great personality for them.

It’s a pretty good time to be a borrower, right?

Yes, and I think one thing that’s interesting is the presence of the alternative lenders that are in the market right now. That continues to be an expansive group, and we have used them. We borrowed $5 billion last year, and that’s probably split $3 billion to $4 billion in refinancings and $500 [million] to $600 million in construction financings and transition financings. You’re seeing those transitional lenders be really active in those markets because they understand the real estate markets and mechanics of development properties a lot better than more traditional lenders. The market has gotten very competitive, and spreads have come in with those alternative lenders who historically looked to value add-type construction of redevelopment projects.

The construction side is a little more difficult. Big banks and alternative lenders and insurance companies are looking to make those type of investments but more with sponsors that have a track record of execution and that they have relationships with. We’re fortunate enough to be in that group and we have terrific access to ground-up construction financing.

Has your construction financing primarily come from traditional or nontraditional lenders?

We were very active on the construction borrowing side and used a combination of both traditional and alternative lenders for our New Rochelle, Yonkers and [Garvies Point Long Island] projects as well as the second phase of our Ritz Carlton Residences North Hills project [in Long Island]. I think alternative lenders are still credit-metric focused and maintain that discipline, but they understand the complexities and can focus more on the real estate side of the project.

Additionally, foreign capital is much more willing [to invest] than it previously was and finds lending more attractive from the standpoint of risk benefit metrics. The alternative lenders are benefiting from foreign capital looking to get into lending and investments.

In addition to your New York City presence, RXR is betting on the suburbs.

Our business is New York City-centric but regional in scope, so we look to the suburbs strategically. On the residential side there is an affordability issue in Manhattan, and the notion of trying to solve that in New York City is difficult—foolhardy, even—because there’s just not enough space and it’s not efficient enough to create housing that people can afford. So we think the solution is regional. The suburbs are going through a period of transition and the suburban market of the 1980s and 1990s is slowly becoming a relic in terms of office parks and malls. There’s a re-urbanization not only in New York but across the entire country, and the suburbs really need to wake up and understand that. Unless they change their complexion in terms of their real estate and in terms of office, retail and residential they will continue to lose out to the cities, which has been happening over the last 10 years.

So, you have an interesting combination of the cities—which can’t solve their issues with the housing they can produce—with the suburbs that now need to recreate the housing produced. It’s no longer white picket fences; more densification is needed in downtown developments.

So, we’ve combined those two. We’ve put a lot of effort into working with municipalities and helping them create revitalization programs. What’s interesting is if you go back to the 1960s and 1970s, these downtowns were bustling commercial centers. So the streetscapes and the architecture are already there; they just were abandoned and need to be refigured and revamped.

How’s your Long Island University Brooklyn campus project coming along?

We’re helping LIU with their future plans to redevelop their campus, and that will include some housing options. That will be market housing, but we’re also thinking through some plans to have creative-type shared houses in there. We’ve finished our development agreement and are now in our planning stages.

Are you on the hunt for construction financing yet?

Not yet, but we will be. It’s a pretty major project. I’ve been out whispering about it but—particularly where there is some complexity to it—you want to go through your predevelopment process and have your budgets done so you know what things will cost before you go out and talk construction financing.

So, is it just nonstop action at RXR?

We’re 24/7 here. I say that half-joking, but all weekend long we’re all connected—whether through email or texts—there’s constant collaboration and a flow of ideas. We’re a tight group of people. We worked hard to get to this point, but people come to us for solutions, and they see how we can take a property and recreate it. It’s a good place to be.

Source: commercial

Company That Owns Jessica Simpson and Ellen Tracy Brands Grows at Starrett-Lehigh

Sequential Brands Group has leased more space at the Starrett-Lehigh Building, Commercial Observer has learned, bringing its footprint in the Far West Side property to 75,000 square feet.

The company, which owns, promotes, markets and licenses a portfolio of consumer brands in the fashion, active and home categories, has been in the 19-story building at 601 West 26th Street between 11th and 12th Avenues since August 1999. Sequential—with brands like Jessica Simpson and Ellen Tracy—initially leased the entire ninth floor, reduced its space to 63,000 square feet and is now tacking on an additional 12,000 square feet on that floor, according to information provided by the landlord, RXR Realty.

The new lease is for 15 years and asking rents at the property are in the low $60s per square foot to the mid $90s a foot depending on the view and whether the office has a terrace.

Newmark Knight Frank’s Lance Korman and Brian Cohen brokered the deal for the tenant and RXR’s Bill Elder and Denise Rodriguez represented the landlord in-house. A spokesman for NKF didn’t respond to a request for comment.

RXR has sealed 130,000 square feet of deals in the building since Thanksgiving including a 20,000-square-foot expansion and relocation for OXO (to 41,000 square feet) and a deal with the Collected Group, which moved into 16,572 square feet on Feb. 12.

Elder said in a statement: “We have constant interest in this property, coming from the most demanding and discerning tenants, and with very large requirements. Tenants appreciate the building not only for its iconic nature, but for the amazing community within the building, and robust upgrades to the asset to meet state-of-the-art needs for the companies occupying space here.”

Source: commercial

Financial Services Firm StepStone Group Takes 30K SF at 450 Lex

StepStone Group, a financial services firm, has signed on for 30,000 square feet at RXR Realty’s 450 Lexington Avenue between East 44th and East 45th Streets, Commercial Observer has learned.

The tenant will occupy the entire 37th floor in the 39-story, 910,273-square-foot building via a 10-year lease, a spokeswoman for RXR indicated. The asking rents in the top of the tower, where RXR has rolled out prebuilts, range from $115 to $130 per square foot. StepStone will replace JLL Partners when the new tenant moves from the Lipstick Building at 885 Third Avenue on Aug. 1.

RXR picked up the property via a ground lease in September 2012 for $720 million, property records indicate. The seller was Istithmar World, the Dubai-based investment firm, as CO reported at the time. Tenants include David Polk Wardwell.

RXR’s Lauren Ferrentino represented the landlord in-house along with CBRE‘s Michael Affronti, Silvio Petrillo and Ryan Alexander. Affronti said in a prepared statement provided by RXR: “45o Lexington Avenue is an exceptional asset, and the success we continue to achieve certainly comes as no surprise. The building’s close proximity to Grand Central, panoramic views, high-end installations and strength of ownership are just a few of the components that continue to attract prominent firms to 450 Lexington Avenue.”

Savills Studley’s David Carlos represented the tenant in the deal. A spokeswoman said he was out of the country.

Source: commercial

Convene to Bring Social Events to New 28K-SF Space at 75 Rock

On-demand meeting space provider Convene has signed a 28,232-square-foot lease at RXR Realty’s 75 Rockefeller Plaza for a new location, Commercial Observer can first report.

The space will be the company’s third in an RXR building—as Convene has outposts in 237 Park Avenue and 32 Old Slip—and will be a sort of social “work club,” featuring a range of culinary experiences and cultural programming, according to information provided by Convene.

The new location will open in May, according to a spokeswoman, who declined to provide the terms of the deal. The company’s largest location at 101 Greenwich Street, which is expected to open next month, will also have events and a kitchen, as CO previously reported.

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A boardroom for on-demand conference room requirments. Renderings: Convene

“RXR is excited to collaborate with Convene to develop this innovative concept at 75 Rockefeller and provide a level of services and amenities that is truly unique for Class A office product,” William Elder, the executive vice president and managing director of RXR, said in prepared remarks. “It will establish a new benchmark for an in-building, five-star service experience combined with boutique hospitality appeal that our existing and future tenants will not find anywhere else.”

Convene will occupy space on the 31st and 32nd floors of the 33-story building, which is located on West 51st Street between Fifth Avenue and Avenue of the Americas. The tower recently underwent a $150 million renovation. It was not immediately clear which brokers handled the deal for either side.

The new Convene digs will offer meeting and event space, and collaborative working and common areas. A restaurant serving breakfast, lunch and dinner prepared by Convene’s chefs, will be available all day. There’ll also be a cocktail bar with a barista. And there’ll be a segment for hosting art, music, wellness, culinary and business events.

“Our collaboration will bring a new level of choice and flexibility to the workplace by offering the latest amenities, the best hospitality services and an extensive collection of unique cuisine options to tenants at 75 Rock,” Ryan Simonetti, the CEO and co-founder of Convene, said in a statement.

The new digs at 75 Rockefeller will be Convene’s 12 location in New York City. The company has also established key partnerships with other large landlords, such as Durst Organization and Brookfield Property Partners, as CO reported last year.

Source: commercial

Rock On! This Isn’t Your Father’s Rockefeller

Standing tall at 33 stories high, 75 Rockefeller Plaza was originally built for the Standard Oil Company and known as the Esso Building; it was later renamed the Time Warner Building, serving as the media conglomerate’s headquarters until its lease expiration in 2014. The building’s iconic address and its newly blank canvas was too great an opportunity to pass up for RXR Realty, the owner with a dominant presence in midtown including Class A assets such as 1330 Avenue of the Americas, the Helmsley Building, 450 Lexington Avenue, and 1285 Avenue of the Americas.

When RXR acquired “75 Rock,” it embraced a vision to restore and fully reposition the building to meet the needs of tenants seeking a trophy address and the world-recognized Rockefeller name. Cushman and Wakefield’s Chairman of Global Brokerage, Bruce Mosler, comments on RXR’s completed vision, “This is a building for those seeking both exclusivity and a contemporary environment for their employees. The level of service from lobby experience to overall property maintenance is exceptional.”

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75 Rock was originally constructed with a structural steel frame, concrete slabs, and a limestone façade –  a New York City landmark of the mid-century era. The owner was quick to recognize existing challenges that could warrant typical market pushback – ceiling heights, T-shaped base floor plates, as well as some compromises in views for certain floors.

A holistic renovation plan, including both structural improvements and lifestyle innovations, was needed to attract tenants and produce a building worthy of 75 Rock’s stature and location. To address this, RXR created and deployed a $150 million redevelopment plan. The first step was restoring the building’s limestone façade, staying true to the building’s original design. The same limestone is found in the through-block lobby connecting entrances between 51st to 52nd Streets and also includes terrazzo floors, an elemental designed 24’ ceiling, a skylight, bronze concierge desk, and gallery space for public art.

RXR also set out to increase the efficiency of the building by reconfiguring its core, making it more efficient and spacious for tenants. 12 new passenger high-speed elevators with marble interiors have been equipped with a destination dispatch system to minimize wait-times, and new HVAC and electrical systems were installed to continue the building’s modernization.  RXR addressed the environmental impact of the asset during the renovation process, implementing new optimized windows. The property anticipates LEED Gold designation.

Additional features that continue to create leasing traffic at 75 Rock include extensive terrace opportunities on the tenth floor with a dramatic floor-to-ceiling solarium, as well as modernized mechanical systems that increase finished ceiling heights above 9 feet throughout the tower.  Building-wide fiber optics, an internet-based tenant work order and visitor processing system, bike storage, augmented loading dock, and messenger center all contribute to the functional modernization that satisfies today’s tenants. Tara Stacom, Executive Vice Chairman of Cushman & Wakefield, praised RXR’s work, “the impact of the significant renovation is immediate and apparent upon entering the lobby and carries throughout the entire building.”

The progressive ownership of RXR goes beyond making physical improvements, offering a service model far ahead of the competitive set – one that is tailored to the profile of its buildings and the tenant mix within them. At 75 Rock, RXR hosts a lively integrated art program, punctuated by the permanent 7ft by 90ft Markus Linnenbrink installation of poured resin, an invigorating use of color. The attention-grabbing Paparazzi Dogs, the four bronze sculptures by celebrated contemporary artists, Gillie and Marc, engage both tenants and the plethora of people walking through. Above the lobby, 75 Rock’s pre-built full floors and marketing spaces also include an array of contemporary art.

RXR’s ownership comprehensively addresses all of the signature elements of being in a world-recognized business and tourist destination at the crown of Rock Center, and tenants like Bank of America/Merrill Lynch have taken notice. The institution’s Wealth Management division occupies 185,000 square feet in the base with multiple terraces. Responding to the tremendous foot traffic, and more specifically, the family foot traffic from Rockefeller Center, RXR staged a major retail coup, bringing American Girl Doll off of Fifth Avenue, and into its rejuvenated 40,000 square foot retail experience.

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75 Rockfeller Plaza

The remaining retail space is experiencing a surge of traffic by “world-class dining and ‘foodie’ establishments,” states Michael O’Neill, Cushman and Wakefield’s Senior Director of Retail Services. “With popular bridge retail such as Warby Parker and Blue Mercury now on Avenue of the Americas, the success of the Baccarat and new boutique hotels like The Whitby, interesting, desirable retail and dining options are peppering midtown side streets. 75 Rock has a triple-threat advantage being amid prime shopping, business, and tourism, as well as luxury mixed-use and residential towers.” The strategic and fully segregated through-block entrances for office tenants also keeps dense shopping foot traffic away from the office occupants.

“Office activity has been extremely strong,” explains Mosler, “the full floors in the tower satisfy many of the boutique financial firms migrating from Fifth and Park Avenues. Ownership is committed to making deals happen and is efficient in the process.”

Contributing to the robust pick up in interest at 75 Rock is RXR’s own office expansion onto two full floors, signaling the management team’s support for the asset and its fully modernized, ultra-equipped office environment, and an address synonymous with status. It has been noted that other tenants in the area have vocalized the personable nature of the building staff when entering or passing through the building.  Mosler continues, “Today, ‘state-of the-art’ goes beyond the physical improvements. Tenants pay up for the amenities and service model, which – when done well – requires hands-on, dedicated ownership to see it through.”

While Manhattan’s midtown trophy towers see the ebbs and flows of market interest, tenants at 75 Rock are meeting ownership’s pricing due to the quality of the physical asset and the level of service. Ira Schuman, Vice Chairman of Savills-Studley, explained, “our clients recognize that beyond the successful transformation and major redevelopment of the property, the building has so many practical advantages – proximity to east and west transportation lines, excellent management, and access to first-class amenities.”

Leading the way in employee well-being and professional success, RXR is currently working with Convene to launch a new concept at 75 Rock, which combines Convene’s existing conferencing amenities on one full tower floor, with a private member experience to drive business networking, wellness and education series, and one-of-a-kind dining experiences on the building’s entire top floor. Michael Burke, Convene’s VP of Real Estate and Development explains the collaboration, “today’s office tenants demand a more evolved workplace, and even the most iconic real estate must adapt. Convene is thrilled to expand on our partnership with RXR as a driving force for the re-imagined employee experience at Rockefeller Center.” This partnership will benefit both co-working entrepreneurs, and the usual suspects of Fifth Avenue financial institutions.

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Paparazzi Dogs by Gillie and Marc

“The building is an ideal fit for foreign banks, wealth management, and boutique financial users,” according to Schuman, who recently represented Austria’s leading bank, Erste, in leasing the entire 12th floor. “Tours are impressive to prospective tenants and RXR is terrific through the transaction process.” RXR’s commitment to customer service and meeting the expectations of future decision makers is apparent.

“Ownership is breathing a new spirit and energy into a Class A trophy building, making it approachable and desirable to the new shifting users and office cultures,” asserts Mosler. RXR’s adoption of forward-thinking leasing and marketing trends further demonstrates management’s foresight surrounding tenant psyche. Pronouncedly so, the current marketing campaign emphasizes the changing face of today’s female executive and speaks to the many female decision-makers touring space at the building. 75 Rock also features a newly completed pre-built collection ranging from 4,000 to 7,500 square feet utilizing a high-end and hospitality-inspired design palette. Management recognizes the demand for such space and anticipates building more of it. Tara Stacom affirms, “the economic value of this level of turnkey space outranks competitive availabilities in the market.”

On a final note, RXR recently completed a $300 million refinancing with TH Real Estate – another piece of the plan to adapt this marquee asset for today’s tenant. The modernization of 75 Rockefeller Plaza demonstrates the power of an owner and developer when it is committed, not only to leasing space today, but to investing in the holistic success of its tenants tomorrow.

Source: commercial

RXR Scores $285M Mortgage for Midtown Office Skyscraper

DekaBank has provided a $285 million loan to RXR Realty for 1330 Avenue of the Americas, property records show. The loan replaces and consolidates previous debt on the property with a new $97 million mortgage.

In 2011, New York Community Bank provided a $200 million loan on the 40-story building, located between West 53rd and West 54th Streets. That debt supported RXR’s $400 million acquisition of the tower, which was built in 1965 and renovated ten years ago.

Tenants at the 534,000-square-foot tower include Silvercrest Asset Management, CKR Law, and the Robert Wood Johnson Foundation, a public-health philanthropy. Furniture company Knoll leases a substantial 50,000-square-foot space on the building’s first few floors for its flagship New York City showroom.

RXR’s 2010 acquisition of the property, designed by Emory Roth & Sons, culminated longstanding interest in the building from Rechler. The RXR CEO had long pestered 1330’s previous owner, Harry Macklowe, about its availability, and was finally able to put the deal together on short notice while preparing to attend his niece’s bat mitzvah, The Real Deal reported.

When Macklow owned the trophy asset, its $187 million mortgage was securitized in the Deutsche Bank-sponsored COMM-FL14 CMBS transaction. That loan was paid off when RXR purchased the building.

Representatives from RXR and DekaBank were not immediately available for comment.

Source: commercial

Optimism Abounded at REBNY’s 2018 Prom

Despite a tumultuous year for real estate—with investment sales falling off a cliff, retail suffering due to technology and banks tightening their lending—it was a night full of spendor, high spirits and big names at the Real Estate Board of New York’s gala yesterday.  

The 122nd annual REBNY banquet at the New York Hilton Midtown at 1335 Avenue of the Americas featured a power-packed list of politicians, developers, brokers, bankers and other professionals. Many in the room expressed optimism for 2018 to Commercial Observer.

“It’s a great time to celebrate the industry,” REBNY President John Banks told CO, without giving further explanation.

However, Bruce Mosler, the chairman of global brokerage of Cushman & Wakefield, later expounded that economic factors are positive and things seem to be looking up for 2018.

“I’m not worried about macroeconomic risk, I’m more concerned about geopolitical risk,” Mosler said.

While nearly 2,000 partygoers hobnobbed at the cocktail hour before the award presentation, members from the Campaign to Stop REBNY Bullies rallied in front the hotel against the trade organization.

Top pols that graced the event included Mayor Bill De Blasio, recently minted for his second term, Attorney General Eric Schneiderman, New York City Comptroller Scott Stringer, Bronx Borough President Rubén Díaz Jr. and Brooklyn Borough President Eric Adams. Meanwhile, some of the real estate community’s brightest stars in attendance included RXR Realty’s Scott Rechler, Extell Development Company’s Gary Barnett, Durst Organization’s Douglas Durst, C&W’s John Santora, CBRE’s Mary Ann Tighe (a former REBNY chairman), L&L MAG’s MaryAnne Gilmartin and Robert Lapidus (also of L&L Holding Company), Avison Young’s A. Mitti Liebersohn, Newmark Knight Frank’s Barry Gosin, former REBNY President Steven Spinola; and new REBNY Chairman William Rudin, the CEO and co-chairman of Rudin Management Company.

United States Senator of New York Senator Chuck Schumer, the only politician being honored with the award last night, was busy in Washington, D.C., with Congress trying to pass a spending bill to avoid a government shutdown. (He earned the John E. Zuccotti Public Service Award.)

Tishman Speyer President and Chief Executive Officer Rob Speyer, REBNY chairman until December 2017, was the recipient of the Harry B. Helmsley Distinguished New York Award. LeFrak Organization CEO and Chairman Richard LeFrak was presented the Kenneth R. Gerrety Humanitarian Award.

Joanne Podell, an executive vice chairman at C&W, earned the Louis Smadbeck Memorial Broker Recognition Award. Rudin Management Company Senior Vice President Gene Boniberger was honored with the George M. Brooker Management Executive of the Year Award. Ron Lo Russo, the president of C&W’s agency consulting group, won the Young Real Estate Professional of the Year Award.  

And Elizabeth Stribling, chairman of Stribling & Associates, received The Bernad H. Mendik Lifetime Leadership in Real Estate Award. In her speech, Stribling recalled having known Mendik and what it was like attending the REBNY banquet for the first time.

“It was exactly 50 years ago tonight that I first attended my first REBNY gala as a 21-year-old rookie broker,” she said. “I was starstruck. And I still am.”

Source: commercial

What Issues Should REBNY Be Fighting For?

For decades, the Real Estate Board of New York has represented the old guard of New York City: the most powerful developers, landlords, brokerages, construction companies and the folks they do business with, from financial institutions to architecture firms. And they’ve had great success at it.

But, for better or worse, the new guard—and its concerns—is going to require the organization’s attention.

Despite its financial and political clout, REBNY’s critics have charged that the trade organization has advocated planning and development policies that favor Manhattan and the short-term interests of its members, rather than pro-growth initiatives that would benefit the entire city in the long term. With a population that’s growing and a shockingly low residential vacancy rate of 1.9 percent in Manhattan, as per Douglas Elliman’s December 2017 market report, housing will have to be on REBNY’s mind, and it will have to be outside of Manhattan.

Mitchell Moss, an urban planning professor at New York University and the director of NYU’s Rudin Center for Transportation, said that the real estate board could play a valuable role in shaping development in areas where the city needs it most.

“We’ve been very fortunate that the Bloomberg administration was able to rezone so much of the city, but we have to be able to find ways to encourage more development on the waterfront in Staten Island and on the waterfront in the South Bronx, in Red Hook [Brooklyn] and along the East River waterfront,” Moss explained. “We can’t allow communities to simply reject new development because they don’t like it.”

The real estate lobby scored a significant victory last August with the passing of the Midtown East rezoning, which was first proposed, unsuccessfully, by the Bloomberg administration in 2012. Activists and urban planners often wonder what the organization could accomplish if it lobbied for denser residential zoning in Brooklyn, Queens and the Bronx, particularly in neighborhoods that are well served by the subway but populated mostly by one- and two-family homes.

“There are a lot of neighborhoods throughout the boroughs that have transit—subway or LIRR or Staten Island Railroad—and they’re zoned like they’re in northern Connecticut as opposed to New York City,” said Moses Gates, the director of community planning at the Regional Plan Association. “Looking at those neighborhoods as a whole, ones that are very low density in character, wealthier than average and yet have transit opportunities and job opportunities and infrastructure that you don’t find in the suburbs, that’s where I think we should be looking at ‘How do we add housing and affordable housing?’ That’s what REBNY should be thinking about also.”

Although the trade organization has created committees focusing on Brooklyn, Queens and Upper Manhattan in the past few years, it hasn’t yet made it to the Bronx, where a wave of development is beginning to reshape the borough’s southern waterfront. REBNY has made inroads with residential brokers in the outer boroughs, as Commercial Observer reported last year, but its track record of attracting and representing outer-borough developers and landlords, particularly smaller firms, has been mixed. The number of outer-borough members wasn’t available by press time.

One incremental reform that REBNY could also help push that would add tremendously to housing would be the legalization of basement apartments in one- and two-family homes. With the help of zoning and building code changes, the city could legalize as many as 100,000 illegal apartments, largely in immigrant-heavy swaths of Queens and the Bronx, according to a 2011 report from neighborhood group Chhaya Community Development Corporation and the Citizens Housing and Planning Council.

Landlords can rack up tens of thousands of dollars in fines if building inspectors catch them illegally renting out a basement or cellar. But the extra income earned from renting them out can help keep a homeowner from sliding into foreclosure. And many of the neighborhoods that saw the highest foreclosure rates last year, like Jamaica, Queens and the Brooklyn neighborhoods of East New York and Canarsie, attract much higher numbers of illegal conversion complaints than the rest of the city, according to city data and a recently released PropertyShark foreclosure report.

Under city rules, basements can be rented in single-family family homes as long as the owners take specific (and sometimes expensive) steps to bring the spaces up to code. Two-family homeowners, on the other hand, aren’t allowed to rent out their basements. Tenants are also prohibited from renting in cellars. (Basements are “at least a story below curb level but have at least half their height above curb-level,” according to a brochure from the city’s Department of Housing Preservation & Development. Meanwhile, a cellar is an enclosed space that has at least half its height below curb level.)

But why would REBNY push for a policy that affects small homeowners rather than big landlords? Gates argued that an accessory dwelling unit, or ADU, program would bring in more business for small contractors and construction firms.

“If you have an ADU law and you’re doing ADU conversions, I think it’s a way of maintaining the [construction] industry through those downtimes,” the planner explained. “And I think it’s in the best interests of the industry to keep a trained workforce that knows how to do this throughout the boom and bust real estate cycle.”

Gates and other housing advocates have urged the real estate board to do more outreach with small, neighborhood developers and contractors, particularly minority- and women-owned businesses, as well as nonprofit developers—a point that REBNY’s new chairman, Bill Rudin, has said he plans to focus on. It’s “about creating opportunities and awareness, training programs and mentoring programs. It’s a responsibility of our members to be proactive in promoting those things.” (See interview on page 42.)

Rudin also said, “We just added two women to the Executive Committee: Amy Rose and Lisa Silverstein.”

A REBNY spokesman also pointed out that the organization partnered with small and minority-owned contractors to pressure the City Council into rewriting a proposed construction safety bill last year. The original version of the bill, Intro. 1447, favored construction unions by requiring apprenticeship programs for all workers on buildings of 10 stories or more. Then the Real Estate Board banded together with open-shop groups to argue that small, minority-owned contractors and their workers would be hardest hit by the new rules, because small firms wouldn’t be able to afford to build new training programs. The open-shop coalition won part of the battle by getting the apprenticeship language eliminated from the bill. But the final version of the proposal, passed in September, will require at least 40 hours of training for workers on building sites that are four stories or taller by September 2020.

Over the past couple years, REBNY has become more vocal about sustainable development while remaining wary of some of the city’s policies. Last year, the group encouraged its building owner members to save energy and reduce their carbon footprints by up to 30 percent with the NYC Carbon Challenge for Commercial Owners and Tenants. At the same time, it has expressed concern that the city’s plan to limit fossil fuel usage—set to go into effect by 2035—by fining landlords will unnecessarily punish the owners of older residential properties, which rely on natural gas or heating oil.

Architects, meanwhile, argue that the trade group could be doing more for green building. Rick Cook, an architect and partner at COOKFOX, said that he wanted the city to offer zoning bonuses as an incentive to include more green space in buildings, either in the form of planted terraces or green roofs.

“Under the concept of biophilic design, people do better if they’re connected to nature,” he explained. “We could incentivize people planting [in] more of the buildings. It would also do some stormwater absorption.”

More plantings would help New York City cut its greenhouse gas emissions and diminish the “heat island effect,” which causes dense urban areas to trap more heat than rural ones, Cook added.

But it’s not just about development. Transit advocacy is also at the top of many wish lists when it comes to REBNY’s citywide work. That includes expanding subways and buses in the outer boroughs, finding ways to raise money for subway maintenance, and pushing for a new Port Authority Bus Terminal and the Gateway Tunnel project, among other issues. 

“Certainly the crisis with our transportation infrastructure is something that is critical to the health of the real estate industry,” said Seth Pinsky, an executive vice president at RXR Realty and the former director of Mayor Michael Bloomberg’s Special Initiative for Rebuilding and Resiliency. “Nobody’s office or apartment building is going to be worth as much if our transportation network continues to deteriorate at the rate it’s deteriorating at. Supporting efforts to better fund our network is something REBNY should be advocating for.”

In fairness, the group has voiced public support for a congestion pricing plan, which would help collect taxes from drivers in New York City to fund the Metropolitan Transportation Authority. It pushed back against a recent proposal for a “transit-maintenance” district that would increase commercial rent by $1.50 a square foot below 60th Street in order to generate cash for the subways. REBNY President John Banks penned  a Real Estate Weekly column arguing that the plan would increase the already-heavy tax burden for commercial businesses while doing nothing to encourage more public transportation use. “This proposal does nothing to discourage driving,” Banks wrote in the November 2017 column. “Simply imposing a fee will do nothing to relieve congestion, and worse, it will do nothing to reduce the harmful impact of greenhouse gas emissions.”

In recent years, REBNY has also advocated for extending the 7 line to Secaucus, N.J., and supported calls for the Gateway rail tunnel between New York and New Jersey.

Moss argued that the board could play a more aggressive role in advocating for federal and state cash for infrastructure and transportation.

“I think this is a very important moment for REBNY because the city has to mobilize to get support in Albany and Washington,” he explained. “They have a very important role to play because we need funding for the mass transit system. We need to recognize the importance of getting the Port Authority bus terminal rebuilt and getting a new train tunnel across the Hudson [River]. There are some really big high-profile projects that are going to be really important for the vitality of the city, to the Manhattan office market, and for anyone who comes through the city on mass transit and commuter rail.”

Ultimately, Pinsky noted, it would benefit the organization to focus on quality-of-life issues, subway construction costs and broader transit problems.

“REBNY is the sort of organization that has to play the short game and the long game,” he said. “The short game is often defensive and involves the ways in which regulation and laws tax the industry on a very granular level…REBNY should be seen advocating for things that aren’t directly beneficial to their members. Showing that kind of civic spirit conveys a kind of goodwill that makes the short game that much easier to play.”

Source: commercial

TIAA Refinances RXR’s 75 Rockefeller Plaza With $300M Package

Scott Rechler’s RXR Realty refinanced its headquarters at 75 Rockefeller Plaza with a $300 million package from pension fund Teachers Insurance and Annuity Association of America (TIAA), according to records filed today with the New York City Department of Finance.

The stack includes a $92 million mezzanine piece, sources told Commercial Observer, and it refinances two previous J.P. Morgan Chase loans, totaling $184 million, from Sept. 30 2014 and another $23.7 million loan provided by the bank on Nov. 1, 2016. TIAA rounded out the transaction with a new $280,000 gap mortgage. The package was provided by TH Real Estate, an affiliate of global investment manager Nuveen, which is the investment arm of TIAA.

J.P. Morgan assigned the debt to TIAA and it was then split into two portions—$148.6 million and $59.4 million. The $148.6 million loan is comprised of a $83.5M A-note and a $65.1 million B-note while the $59 million is the combination of four notes—$23.7 million, $4.8 million, $30.6 million and the new $280,000 gap mortgage.

RXR, which controls the 32-story building through a 99-year, triple-net ground lease, completed a $150 million renovation of the building and reopened it in February. The firm has moved its headquarters from 1330 6th Avenue into a 14,000-square-foot space on the 14th floor of the tower—with an alternate address at 15 West 51st Street, between Avenue of the Americas and Fifth Avenue. 

“TH Real Estate is pleased to add the most modernized office building in Rockefeller Center to our portfolio and to continue our existing relationship with a premier property owner in RXR Realty,” Michael A. Lembo, a senior director at TH Real Estate, told CO.

Commercial Observer reported in February that brokerage Cushman & Wakefield leased 40,000 square feet of retail space to American Girl and 185,343 square feet to Bank of America and Merrill Lynch Wealth Management (an arm of the bank) as the anchor tenant of the 623,000-square-foot building.

Most of the ground floor and the entire retail basement is occupied by American Girl, but there is a remaining 5,000 square feet on the ground floor, which features up to 24-foot ceiling heights, as CO previously reported.

Erste Group Bank AG, a Vienna, Austria-based financial services provider, has leased the entire 12th floor—14,000 square feet of space—as CO reported in August.

Officials at RXR declined to comment on the transaction.


Source: commercial

Broad Street Development and Invesco Recap 80 Broad Street, Valued at $235M

Broad Street Development and new equity partner Invesco have completed a $235 million recapitalization on 80 Broad Street, between Stone and Marketfield Streets, according to an announcement from BSD. The rebuilt capital stack consists of an assumed $102 million first mortgage from AIG, an additional $30 million in mezzanine debt from the insurer and a fresh equity contribution from Invesco, representing a controlling stake in the building.

BSD purchased the 423,000-square-foot office tower in 2014 for $173 million with the help of the AIG mortgage, along with preferred equity from RXR Realty and Colony Capital. The addition of new financing from AIG and Invesco effectively removes that previous pair of preferred equity partners from the deal, the BSD statement says.

Four years remain on AIG’s original seven-year mortgage, set for payoff in 2021.

“We are reinvesting in Downtown Manhattan in a major way,” Raymond Chalme, the CEO of BSD, said in a statement. “We believe in this asset and the market, and we know that working with…Invesco, we can make further improvements to 80 Broad Street so it can achieve even greater success.”

Chalme’s firm is actively exploring other opportunities to work with the Atlanta-based investment management company in New York City, he added.

The 36-story building in Lower Manhattan is host to a handful of multifloor tenants, including law firm McGivney & Kluger and the interior-decorations outfitter The Robert Allen Group, but the majority of companies who lease space in the building occupy less than 5,000 square feet each. That focus on smaller lessors is by design, David Israni, a BSD senior managing director, told Commercial Observer.

“We were big into having some smaller users here,” Israni said. “The floor plates lay out quite well for smaller [tenants].”

Competing buildings in the Financial District have cleared out entire floors to try to attract major, 20,000-square-foot tenants in recent years, Israni noted. That trend has slashed the supply available for small office tenants that want access to the neighborhood’s dense network of subways and transit options—especially technology and media companies that might be new to the area.

During the three years BSD has operated the building, it has been able to increase rents on some floors. “It’s just a flight to quality Downtown,” Israni said.

Proceeds from the new capitalization will go towards a refresh of the lobby and the building’s elevators. Tenants already have access to a bike room and a conference space, and more amenities are on the way, according to Israni.

AIG and Invesco did not immediately respond to a request for comment.


Source: commercial