Metro Loft, David Werner acquire full control of former Pfizer HQ in Grand Central

Metro Loft Management and David Werner Real Estate Investments through the entity 235 East 42 Owner LLC acquired full control from Alexandria Real Estate Equities through the entity 42nd & Second Holding Co LLC the ground lease that owns the office building (O4) at 235 East 42nd Street in Grand Central, Manhattan. The expected use is conversion/addition.
In this transaction, a stake worth $18 million, or 40 percent of the $45 million, was sold, according to a PincusCo analysis of city records. In 2021, Werner and Alexandria extended the ground lease to 2057, valuing the transaction at $406.6 million. Metro Loft and Werner recently filed plans for a conversion  of this an the neighboring building, 219 East 42nd Street.

This is a similar transaction to the one Werner and Metro Loft executed in July 2024, in which they bought out Alexandria at the adjacent 219 East 42nd Street in a $60 million deal.
The deal closed on October 8, 2024 and was recorded on October 22, 2024. The property has 672,462 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $66 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 Alexandria Real Estate Equities was David Werner. The signatory for Metro Loft Management and David Werner Real Estate Investments was David Werner.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Metro Loft Management purchased three properties in three transactions for a total of $483.3 million and has no record it sold any properties over the past 24 months.
The seller Alexandria Real Estate Equities had not purchased any other properties and sold two properties in two transactions for a total of $79.1 million over the same time period.

The property

The office building in Grand Central has 672,462 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 100 feet and is 225 feet deep with a total lot size of 37,657 square feet. The lot is irregular. The zoning is C5-3 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 $222.7 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 $3,800 in OATH penalties in the last year.

Development

On the lot, there is one active major alteration construction project, M01075133, for a 927-unit, 664,653 square-foot J-2 building. The project was submitted by Metro Loft Management and filed by Robert Travis with plans filed July 3, 2024 and it has not been permitted yet.

The neighborhood

In Grand Central, The majority, or 83 percent of the 44.4 million square feet of commercial built space are office buildings, with hotel buildings next occupying 8 percent of the space. In sales, Grand Central has 3.1 times the average sales volume among other neighborhoods with $771.9 million in sales volume in the last two years and is the 12th highest in Manhattan. For development, Grand Central is the 9th most active neighborhood among other neighborhoods. It had 5.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 12 percent of the neighborhood’s built space. There were three pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of three of the four commercial properties representing 1,261,818 square feet of the 1,403,226 square feet. The two identified owners are David Werner Real Estate Investments and Durst Organization.
There are no active new building construction projects on this tax block.

All properties are office.

The buyer

The PincusCo database currently indicates that Metro Loft Management owned at least seven commercial properties with 1,148 residential units in New York City with 2,778,799 square feet and a city-determined market value of $690.4 million. (Market value is typically about 50% of actual value.) The portfolio has $540.7 million in debt, with top three lenders as Deutsche Bank, Athene Holding, and Valley National Bank respectively. Within the portfolio, the bulk, or 62 percent of the 2,778,799 square feet of built space are office properties, with elevator properties next occupying 38 percent of the space. They are all located in Manhattan.
The PincusCo database currently indicates that David Werner Real Estate Investments owned at least four commercial properties with 133 residential units in New York City with 1,564,426 square feet and a city-determined market value of $493.7 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 92 percent of the 1,564,426 square feet of built space are office properties, with elevator properties next occupying 8 percent of the space. They are all located in Manhattan.

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