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January 23, 2019  

Werner Team Buying Stake in 237 Park Avenue

A syndicate led by David Werner has agreed to purchase a roughly 40% stake in the office building at 237 Park Avenue in Midtown Manhattan.

The deal values the 1.25 million-square-foot property at roughly $1.25 billion, or $1,000/sf.

Cushman & Wakefield is brokering the recapitalization for a partnership between RXR Realty of Uniondale, N.Y., and Walton Street Capital of Chicago. That duo is retaining the remaining 60% ownership of the building.

Werner is a prolific investor who teams up on purchases with institutions and wealthy individuals alike. For example, last year he joined forces with Alexandria Real Estate Equities of Pasadena, Calif., and DWS Group of New York to buy the adjacent office buildings at 219 and 235 East 42nd Street in Manhattan, totaling 1.1 million sf, for $357 million, or $325/sf, from pharmaceutical giant Pfizer. His partners in the 237 Park Avenue deal couldn’t be learned. The transaction is expected to close in the next few months.

RXR and Walton Street bought the 21-story building in 2013 from Lehman Brothers for $825 million, or $660/sf. They put the property up for sale in 2017, but then opted to refinance instead with a $781 million fixed-rate debt package from Morgan Stanley and Societe Generale. In conjunction with the refinancing, the property was appraised at $1.3 billion in May 2017.

The building, also known as 466 Lexington Avenue, is 98% occupied. The tenants include New York and Presbyterian Hospital (479,000 sf until 2048), J.P. Morgan (255,000 sf until July 2020) and J. Walter Thompson (193,000 sf until 2027). There is 20,000 sf of ground-floor retail space.

The building was constructed in 1914 and redeveloped in 1981. The RXR duo spent $65.8 million on a renovation that included upgrades to the entrances, lobby, atrium and retail storefronts, as well as to an outdoor public plaza.

The building, across from Grand Central Terminal, occupies the full block stretching from East 45th to East 46th Streets, between Park and Lexington Avenues.

It was formerly owned by Broadway Partners, which acquired it at the market peak in 2007 via a $4.8 billion portfolio acquisition from a Beacon Capital partnership. At the time, the appraised value was $1.3 billion. The building’s value plummeted to $610 million during the ensuing recession. New York-based Broadway surrendered the property in 2012 to its lender, Lehman.