Vanbarton pays $95.5M to William Kaufman Org, Principal, for FiDi office for resi conversion

Vanbarton Group through the entity 77 Water LLC paid $95.5 million to William Kaufman Organization and Principal Real Estate Investors through the entity Water Street Leasehold LLC and Water Street Fee LLC for the office building (O4) at 77 Water Street in the Financial District, Manhattan. The expected use is conversion.
Bloomberg reported in September 2024 that Vanbarton planned to buy the building and convert it to residential apartments.
The deal closed on December 4, 2024 and was recorded on December 12, 2024. The property has 541,568 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $176 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 William Kaufman Organization and Principal Real Estate Investors was Jonathan Kaufman Iger of William Kaufman Organization and Siobhan Harman and James J. Halliwell of Principal. The signatory for Vanbarton Group was Damiano Buffa. The contract date was September 25, 2024. The two-part transaction occurred with an $84.4 million ground lease assignment and an $11.1 million deed for the fee.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Vanbarton Group had purchased any other properties and sold five properties in five transactions for a total of $478.2 million over the past 24 months.
The seller William Kaufman Organization had not purchased any other properties and had not sold any properties over the same time period. The 541,568-square-foot property generated revenue of $28.9 million or $53 per square foot, according to the most recent income and expense figures.

The property

The office building in Financial District has 541,568 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 214 feet and is 121 feet deep with a total lot size of 25,779 square feet. The lot is irregular. The zoning is C6-9 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 $141.6 million. The most recent loan totaled $121.1 million and was provided by ACORE Capital on July 26, 2022.

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 $3,950 in OATH penalties in the last year.

The neighborhood

In Financial District, The majority, or 74 percent of the 79.9 million square feet of commercial built space are office buildings, with elevator buildings next occupying 15 percent of the space. In sales, Financial District has the 4th highest sale turnover among other neighborhoods in the city with $2.3 billion in sales volume in the last two years. For development, Financial District is the 3rd most active neighborhood among other neighborhoods. It had 13.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 17 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 two of the two commercial properties representing 1,015,028 square feet of the 1,015,028 square feet. The two identified owners are Principal Real Estate Investors and UDR, Inc..
There are no active new building construction projects on this tax block.

The majority, or 53 percent of the 1 million square feet of built space are office buildings, with elevator buildings next occupying 47 percent of the space.

The seller

The PincusCo database currently indicates that William Kaufman Organization owned at least four commercial properties in New York City with 2,227,860 square feet and a city-determined market value of $695.6 million. (Market value is typically about 50% of actual value.) The portfolio has $477 million in debt, with top three lenders as Wells Fargo, Signature Bank, and Bank of America respectively. Within the portfolio, all identified are office properties. They are all located in Manhattan.
The PincusCo database currently indicates that Principal Real Estate Investors owned at least three commercial properties with 168 residential units in New York City with 697,591 square feet 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 buyer

The PincusCo database currently indicates that Vanbarton Group owned at least 17 commercial properties with 1,113 residential units in New York City with 2,216,510 square feet and a city-determined market value of $793.1 million. (Market value is typically about 50% of actual value.) The portfolio has $1.3 billion in debt, with top three lenders as Blackstone Group, Blackstone Mortgage Trust, and Northwestern Mutual Life Insurance respectively. Within the portfolio, the bulk, or 67 percent of the 2,216,510 square feet of built space are office properties, with elevator properties next occupying 18 percent of the space. The bulk, or 92 percent of the built space, is in Manhattan, with Bronx next at 8 percent of the space.

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