Sovereign Partners buys Nuveen’s Midtown East office building for $177M, bought for $161M in 2014

The Sakhai brother’s Sovereign Partners through the entity 780 3rd Owners, LLC paid $177 million to Nuveen Real Estate through the entity T-C 780 Third Avenue Owner LLC for the office building (O4) at 780 Third Avenue in Midtown East, Manhattan.
The deal closed on June 25, 2024 and was recorded on July 9, 2024. The property has 490,020 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $361 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 Nuveen Real Estate was Brian Wallick. The signatory for Sovereign Partners was Cyrus Sakhai. The contract date was May 21, 2024. The Real Deal reported last month it was in contract. Cyrus Sakhai and Darius Sakhai are principals with Sovereign. Nuveen is a wholly owned subsidiary of Teachers Insurance and Annuity Association of America. TIAA bought the building in July 1999 for $161 million.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Sovereign Partners purchased two properties in two transactions for a total of $239.5 million and has no record it sold any properties over the past 24 months.
The seller Nuveen Real Estate purchased properties in two transactions for a total of $69.1 million and had not sold any properties over the same time period.

The property

The office building in Midtown East has 490,020 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 200 feet and is 120 feet deep with a total lot size of 22,083 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 $137.3 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 $875 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on December 28, 2012. On the lot, there is one active major alteration construction project for a 490,000 square-foot B building. The project was submitted by Sandy Forbes with plans filed November 19, 2019 and permitted September 18, 2020.

The neighborhood

In Midtown East, The majority, or 81 percent of the 62.6 million square feet of commercial built space are office buildings, with hotel buildings next occupying 7 percent of the space. In sales, Midtown East has the 2nd highest sale turnover among other neighborhoods in the city with $3.1 billion in sales volume in the last two years. For development, Midtown East is the 2nd most active neighborhood among other neighborhoods. It had 15.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 25 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of two of the four commercial properties representing 849,868 square feet of the 2,379,169 square feet. The two identified owners are Varde Partners and Constellation Hotels Holding Limited.
There are no active new building construction projects on this tax block.

The majority, or 64 percent of the 2.4 million square feet of built space are office buildings, with hotel buildings next occupying 36 percent of the space.

The seller

The PincusCo database currently indicates that Nuveen Real Estate owned at least 73 commercial properties with 5,698 residential units in New York City with 5,578,885 square feet and a city-determined market value of $559.1 million. (Market value is typically about 50% of actual value.) The portfolio has $134.1 million in debt, borrowed from Nuveen Real Estate. Within the portfolio, the bulk, or 85 percent of the 5,578,885 square feet of built space are elevator properties, with walkup properties next occupying 14 percent of the space. The bulk, or 69 percent of the built space, is in Bronx, with Brooklyn next at 19 percent of the space.

The buyer

The PincusCo database currently indicates that Sovereign Partners owned at least one commercial property in New York City with 171,591 square feet and a city-determined market value of $76.1 million. (Market value is typically about 50% of actual value.) The portfolio has $152.7 million in debt, borrowed from Jasper Lake LLC and Deutsche Pfandbriefbank. The portfolio consists of at least a single office property. It is located in Manhattan.

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