JV Nabs $430M Times Square Gateway Development Site
By Gail Kalinoski, Contributing Editor
Construction of the first mixed-use development in Times Square in 25 years can move ahead now that a joint venture of Maefield Development, Infinity Urban Century L.L.C., The Witkoff Group and New Valley has completed the $430 million acquisition of the site for its Times Square Gateway Center.
The 340,000-square-foot, 36-story development will stand at the northern end of Times Square at 47th Street and 7th Avenue and feature a 500-room hotel, 130,000 square feet of retail on multiple levels and a 24,000-square-foot LED sign wrapping around the façade. The building will also have a rooftop and entertainment venue that overlooks Time Square. The LED sign will be the largest in the United States.
“The Times Square Gateway Center will greatly enhance the North end of Times Square,” said Ike S. Franco, co-managing partner of Infinity Urban Century. “With the combined strength of Maefield Development, New Valley and The Witkoff Group, this project has the potential to become one of the most innovative New York City developments in decades and to further cement the image of Times Square as the most vibrant global retail and entertainment district.”
Starwood Capital is providing $475 million in acquisition and construction financing. Of that, $375 million was funded at closing.
Maefield and Infinity Urban Century spent several years assembling all the purchase agreements for the fee simple interest in the land from the owners of 701 Seventh Ave. They needed lease buyout agreements from the long-term retail tenants that had occupied the ground floor and repurchase agreements from the existing façade signage lease holders.
The 11-story story building at the site, more than 100 years old, will be partially demolished. Within two years, the retail and LED sign should be completed. The JV expects to spend $170 million on the retail portion and $200 million on the hotel tower.
Times Square has been transformed into a retail, lodging and entertainment mecca that is visited by hundreds of millions of people. The Cushman & Wakefield Marketbeat Retail Snapshot for the second quarter notes that, “Tourism continues to play a vital role towards the success of major retailers.” The report said that prime Manhattan markets including Times Square should “continue to see stable to moderate growth in rents and activity as the availability of quality space remains low.” The average asking rent for Times Square properties in second quarter was $1,850, second only to the prime retail stretch of Fifth Avenue from 49th to 60th street that saw rents of $2,067.
Wallace Schwartz and Douglas Heitner of the law firm Kasowitz, Benson, Torres and Friedman represented The Witkoff Group and New Valley, a subsidiary of Vector Group, in the acquisition.
The Witkoff Group is a real estate investment firm with diverse commercial real estate assets. Founded by Steve Witkoff, it specializes in acquiring undervalued properties in key central business areas. Its portfolio features office and industrial properties, residential buildings, and land and hotel development interests. Along with Cammeby’s International, it recently sold a $68 million stake in the landmark Woolworth Building in Manhattan to Alchemy Properties Inc. which will turn the upper floors into luxury residences.
New Valley is the real estate investment subsidiary of Vector Group Ltd. It owns a 50 percent ownership interest in Douglas Elliman Realty, the largest residential real estate brokerage in New York City. New Valley has also invested in projects in California, New York and Washington, D.C., including the St. Regis Hotel, a luxury hotel which it sold after extensively renovating the property.
Maefield Development is a privately-owned real estate company headed by CEO Mark Siffin. The firm focuses on developing undervalued properties into award-winning and successful properties in cities like Los Angeles, San Francisco, Miami and Kansas City. It has developed over 5 million square feet of retail and office space and nearly 5,000 multi-family and single-family properties.
Infinity Urban Century is the urban property investment arm of Infinity Group, a privately-held investment holding company led by Franco and his partners Steven J. Kassin and Etienne Locoh. The firm’s portfolio has more than 50 commercial and development projects. The principals have led more than $2.5 billion of real estate investments and are known for repositioning under-valued properties, particularly urban retail and mixed-use assets.