Savanna has sold 1375 Broadway, a 510,000-square-foot office building in New York, to Westbrook Partners for $310 million, in an off-market transaction. Savanna sold the property on behalf of Savanna Real Estate Fund II, while Westbrook bought the asset through Westbrook Real Estate Fund IX, according to two people familiar with the matter.
The New York-based private equity real estate firm originally had purchased the property in December 2010 for $135 million, with plans for $26 million of improvements, according to data provider Real Capital Analytics. During more than four years of ownership, Savanna completed an extensive repositioning that included a redesign of the lobby and entrance, and a renovation of the façade, roof and retail storefronts.
The firm also leased over 190,000 square feet during its ownership and increased some of the rents from $22 per square foot at acquisition to low $60’s per square foot today. The building currently is 91 percent occupied, according to RCA.
However, PERE understands that Westbrook saw 1375 Broadway as a value-add opportunity because many of the leases in the building currently are 50 percent below market. Less than half of the building is leased at rents in the low $60’s, while the majority of rents are at about $30 per square foot, one person said. Westbrook was said to have looked at 1375 Broadway, 100 Wall Street and 31 Penn Plaza, all of which Savanna wanted to sell to close out its second fund, but ultimately chose to buy only 1375 Broadway.
“Savanna has transformed 1375 Broadway into a standout office property in the Broadway corridor through our intensive repositioning along with the Colliers and Winick leasing teams’ hard work, which has paid off with a great roster of new office and retail tenants,” said Cooper Kramer, Managing Director at Savanna. “These tenants represent major growth industries in New York including technology, beauty and fashion.”
Tenants at 1375 Broadway include TD Bank; Smartling, Inc., a cloud-based enterprise translation management company; tarte cosmetics; and The Meltwater Group, a provider of digital intelligence and marketing solutions.
Savanna was advised by Eastdil Secured and Savills Studley. Eastdil also represented Westbrook in the transaction.