Morgan Stanley Real Estate Investing (MSREI) has formed a joint venture with New York-based developer The Witkoff Group to acquire a long-vacant, 350,000-square-foot office building in New York from the estate of Lehman Brothers for $191 million.
According to the real estate investment arm of the New York investment bank, MSREI acquired 1107 Broadway – formerly known as the second Toy Center Building – in partnership with The Witkoff Group. The joint venture plans to convert the vacant 16-storey building, which is located next to Madison Square Park, into luxury condominiums. Various media reports state that the joint venture will infuse $100 million of capital into the property for that renovation. Officials at MSREI and The Witkoff Group declined to provide additional comment.
Lehman Brothers issued a statement saying it had sold its interest in 1107 Broadway via an auction, which took place on 29 June. The sale of the building follows the sale of 200 Fifth Avenue – formerly the main Toy Center Building – to JPMorgan Asset Management for $726 million earlier that month.
“Since Lehman's bankruptcy filing, we have followed a strategy of holding and investing in certain assets in order to achieve a better return than would have been possible had we sold them in 2008 and 2009,” said Jeff Fitts, a managing director at Alvarez & Marsal, which is overseeing the wind-down of Lehman's estate. “As the sales of 1107 Broadway and 200 Fifth demonstrate, by holding these assets until the real estate market improved and investing in them when we believed those investments would yield significant returns, we have been able to achieve excellent results for our creditors.”
200 Fifth Avenue and 1107 Broadway, together comprising more than one million square feet, were known for years as the International Toy Center, a hub for US toy manufacturers and distributors. The American International Toy Fair, the industry's annual trade show, was held there each year.