Principal Real Estate turns over Midtown West office tower to Barings through $160.98M deed-in-lieu

UPDATED, 6:15 a.m., May 2, 2024: Principal Real Estate Investors turned over the 311,501-square-foot office building 1370 Sixth Avenue in Midtown West, Manhattan, to Barings, an asset manager and subsidiary of MassMutual Financial Group, in a deed-in-lieu of foreclosure transfer valued at $160.98 million. That figure is $10.98 million more than the amount Principal borrowed from MassMutual in 2014.
MassMutual through its Massachusetts Life Insurance Company, lent Principal $150 million in 2014, about eight years after Principal acquired control of the property, also known by the address 1370 Avenue of the Americas. Principal bought the tower in 2006 through two transactions totaling $198.4 million, and then in 2009, it paid two other entities $21.9 million for additional stakes in the building.

The signatories for Principal were Johnna Donahue and Kristine Soliday. The signatory for Barings was Mark Freeman.

The Commercial Observer reported in February that the office tower was in contract for about $160 million.

Barings, an asset manager, bought a Garment District hotel building in 2022 for $73.7 million.

The PincusCo database currently indicates that Principal Real Estate Investors, a lender and owner in New York, owned at least three commercial properties with 697,591 square feet, 168 residential units and a city-determined market value of $170.6 million. (Market value is typically about 50% of actual value.) The portfolio has $39 million in debt, borrowed from MetLife. Within the portfolio, the bulk, or 78 percent of the 697,591 square feet of built space are office properties, with elevator properties next occupying 20 percent of the space. The bulk, or 78 percent of the built space, is in Manhattan, with Queens next at 22 percent of the space.

The office building in Midtown West has 311,501 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 100 feet and is 135 feet deep with a total lot size of 14,058 square feet. The lot is irregular. 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 $108.8 million.

Prior sales and revenue

The 311,501-square-foot property generated revenue of $23.1 million or $74 per square foot, according to the most recent income and expense figures.

Violations and lawsuits

According to city public data, the property has received $16,490 in OATH penalties in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

The neighborhood

In Midtown West, The majority, or 75 percent of the 75.9 million square feet of commercial built space are office buildings, with hotel buildings next occupying 14 percent of the space. In sales, Midtown West has the 3rd highest sale turnover among other neighborhoods in the city with $2.8 billion in sales volume in the last two years. For development, Midtown West is the most active neighborhood among other neighborhoods. It had 26.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 34 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 16 of the 35 commercial properties representing 846,604 square feet of the 1,597,691 square feet. The largest owner is Abraham Heby, followed by Aview Equities and then BLDG Management. There are no active new building construction projects on this tax block.

The surrounding

Within a 400-foot radius of 1368 Avenue Of The Americas, PincusCo identified two commercial real estate items of interests occurred over the past 24 months. One of those two items was a sale which Jin Sup An bought the 5,802-square-foot, eight-unit mixed-use building (S9) on 43 West 54th Street for $5 million from Michael Kontokosta on March 3, 2023. One of those two items was a loan which Warwick Hotels & Resorts borrowed $70.5 million from Citibank secured by the 274,656-square-foot, three-unit hotel (H1) on 1340 Avenue Of The Amer on October 30, 2023.

Correction: The story was updated to reflect that the transfer was a deed-in-lieu of foreclosure, not an arm’s length sale.

Direct link to the property’s ACRIS page and link to DOB NOW portal.