Starwood Capital Group and New York Life Investment Management are buying separate aspects of a retail and office property in New York’s Garment District for a total of $325 million.
Information from data provider Real Capital Analytics has revealed that Greenwich, Connecticut-based Starwood is purchasing the building at 1372 Broadway between West 37th and 38th streets for $175 million. Meanwhile, New York Life is looking to acquire the ground underneath the property for $150 million. The two firms have purchased their portion of the asset from a joint venture between property management firm BLDG Management and investor David Werner.
As part of the deal, media reports have revealed that Starwood will pay an annual ground rent to New York Life on a 99-year lease, which will be restructured every 10 years. At press time, representatives from Starwood and New York Life could not be reached for comment.
1372 Broadway originally was completed in 1914 and renovated in 1999. BLDG and Werner previously acquired the 21-storey, 541,752-square-foot property in 2008 from former banking giant Wachovia (before being purchased by Wells Fargo) for $294 million. Tenants in the building, which is fully leased, include retailers Ann Taylor, Ross Stores and Wal-Mart.
This acquisition is the latest effort in a recent buying spree by Starwood, having opened the year with the acquisition of a commercial loan portfolio with a total face value of $312 million from a southwestern US regional bank. In February, it was announced that the firm purchased a mixed-used property in Miami Beach through a consortium for nearly $324 million. Last month, it was revealed that Starwood agreed to buy seven US shopping centres from The Westfield Group for $1 billion.
Starwood currently is raising between $2 billion and $3 billion for its ninth global real estate fund. Starwood Distressed Opportunity Fund IX, which is focusing predominantly on distressed opportunities in the US, closed on $1.2 billion of equity in December 2011, just four months after it was launched, according to people familiar with the matter. Although it is unclear whether or not Starwood bought 1372 Broadway on behalf of Fund IX, it is unlikely as the property is not a distressed asset.