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REA
July 12, 2017  

Guardian Life HQ in NY Could Hit the Market

Guardian Life’s headquarters in Manhattan’s Financial District is in play.

The insurance company, which leases virtually all of the 846,000-square-foot property, has exercised an option to buy it and is considering the possibility of flipping the building. Guardian recently held talks with sales brokers about a potential listing.

It’s difficult to put a valuation on the 26-story building because Guardian plans to vacate most, if not all, of the space. Also, bidders would have to consider the cost of renovating and possibly repositioning the property, at Seven Hanover Square. Given those factors, market pros estimated that offers could range from $400 to $500 per foot, or up to $423 million.

In 1998, Guardian signed a 20-year lease on 842,000 sf with the three owners: the Milstein family of New York; Swig Co. of San Francisco; and local shop Weiler Arnow Investment.

The lease gave Guardian the right to purchase the property for $147 million. The insurer exercised that option before this year’s March 31 deadline, but it doesn’t need to complete the purchase until the lease expires in September 2019, according to a loan-servicer report. That gives Guardian plenty of time to decide when and if to sell the building.

The insurer has long subleased a large chunk of the space. The occupants include law firm Fragomen, International Business Times and the New York Legal Assistance Group, according to CoStar. Last year, the building produced $15.9 million of net operating income, according to the servicer report.

The Milstein Family, which owns Emigrant Savings Bank, led the development of the property in 1983. The owners spent $23 million on improvements between 1998 and 2002. The building was temporarily closed for repairs in 2012 after flooding from Hurricane Sandy devastated Lower Manhattan. The mechanical systems are still in the basement, and a buyer would likely move them to a higher floor to guard against future flooding.

The property, which has 68 underground parking spaces, is just off Hanover Square Park, between William and Pearl Streets.