Beacon Capital, Kaufman pay $92.5M for office building in Penn Plaza

Beacon Capital Partners and Kaufman Investments through the entity Bcsp-K 875 Property LLC paid $92.5 million to James Wacht, Peter Braus and Sierra Real Estate through the entity New 875 LLC for the office building (O4) at 875 Sixth Avenue in Penn Plaza, Manhattan.
The deal closed on June 30, 2023 and was recorded on July 12, 2023. The property has 214,349 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $431 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)
The signatory for James Wacht, Peter Braus, and Sierra Real Estate was James Wacht. The signatory for Beacon Capital Partners and Kaufman Investments was Kirsten L. Hoffman. The Real Deal reported on the sale earlier this week. Beacon and Kaufman assumed a $53.4 million loan from Genworth Life and Annuity Insurance Company.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Beacon Capital Partners had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller James Wacht had not purchased any other properties and had not sold any properties over the same time period. The 214,349-square-foot property generated revenue of $12.2 million or $57 per square foot, according to the most recent income and expense figures.

The property

The office building in Penn Plaza has 214,349 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 98 feet and is 100 feet deep with a total lot size of 9,875 square feet. The zoning is C6-6 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $58.1 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has received two DOB violations, $11,250 in ECB penalties, and $12,825 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The neighborhood

In Penn Plaza, The majority, or 76 percent of the 20.4 million square feet of commercial built space are office buildings, with hotel buildings next occupying 8 percent of the space. In sales, Penn Plaza has had very little sales volume relative to other neighborhoods with $97.8 million in sales volume in the last two years. For development, Penn Plaza has 2.6 times the average amount of major developments relative to other neighborhoods and is the 13th highest in Manhattan. It had 2.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 13 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the six commercial properties representing 1,211,095 square feet of the 1,646,671 square feet. The two identified owners are Vornado Realty Trust and Jack’s World.
There are no active new building construction projects on this tax block.

The majority, or 93 percent of the 1.6 million square feet of built space are office buildings, with mixed-use buildings next occupying 6 percent of the space.

The seller

The PincusCo database currently indicates that Sierra Real Estate owned at least one commercial property with 16 residential units in New York City with 8,300 square feet and a city-determined market value of $3.6 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single walkup property. It is located in Manhattan.

The buyer

The PincusCo database currently indicates that Beacon Capital Partners owned at least three commercial properties in New York City with 2,106,433 square feet and a city-determined market value of $1.1 billion. (Market value is typically about 50% of actual value.) The portfolio has $609.6 million in debt, borrowed from TPG Real Estate Partners. Within the portfolio, all identified are office properties. They are all located in Manhattan.

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