RXR Realty closed on its roughly $700 million purchase of 450 Lexington Ave. earlier this week, and the deal has improved since it was struck over the summer.
Law firm Davis Polk & Wardwell, which rents about 73% of the 40-story tower, has extended its lease for five years. That means the firm, which occupies 675,000 square feet over 22 stories in the 920,000-square-foot building near East 45th Street, will be there for 15 years instead of 10.
Scott Rechler, chairman and chief executive of RXR, declined to disclose the rent. However, in August the asking rent for top-tier buildings in midtown was $75 a square foot, according to Cassidy Turley.
Neither the lease extension nor the building purchase was straightforward.
The extension came as RXR was in the midst of closing the deal to buy the building and as Davis Polk was working to resolve its lawsuit with the tower’s former owner, Dubai-based Istithmar World, over the rent it was being asked to pay. RXR and Davis Polk reached a lease accord and then the litigation was subsequently settled. CBRE Group Inc. broker Lewis Miller, who represented Davis Polk, declined to comment.
RXR’s purchase of the building was two years in the making. During that time it purchased a $300 million mezzanine loan on the property which was scheduled to mature on July 12, 2012 along with the first mortgage. When Istithmar was having trouble refinancing, RXR used its position to acquire the property in an off market deal.
“This was a very complex transaction,” Mr. Rechler said. “But we are happy that it is done and that we have added a building to our portfolio. ”
RXR has acquired over 5 million square feet of space in Manhattan in the last two years.
Read more: http://www.crainsnewyork.com/article/20120914/REAL_ESTATE/120919929#ixzz26Tbc8WzX
Published: September 14, 2012
Filed Under: Acquisition
RXR is one of the largest owners, managers, and developers in the New York Tri-State area with interests in
88 commercial real estate properties and investments containing 23.3 million square feet with an aggregate gross asset value of $12.0 billion. In addition, RXR has a residential development pipeline of approximately 3,000 units. RXR’s core growth strategy is focused on New York City and the surrounding Tri-State area markets.