Boston Properties to Sell Ownership Interest in Times Square Tower for $684M
By Keith Loria, Contributing Editor
Boston Properties, Inc. has entered into a binding purchase and sale agreement to sell a 45 percent interest in the ground leasehold interest and related tax credits in New York City’s Times Square Tower to an affiliate of Norges Bank for a purchase price of $684 million in cash.
The Class A office building went on the market in June at a price of $1.6 billion. Upon closing, Boston Properties and the affiliate of Norges Bank will form a joint venture and Boston Properties will retain property and leasing management on the property. The joint venture will hold the contractual right to purchase the fee interest in the property beginning in July 2024.
Originally developed by Boston Properties in 2004 for around $650 million, the 47-story office building occupies a full city block and is located at 7 Times Square, between 41st and 42nd streets and between Broadway and Seventh Avenue. It was designed by David Childs of Skidmore, Owings & Merrill.
“It’s a true trophy core asset with a good tenant roster, superb brick and mortar, and relatively new by New York standards,” James Murphy, Colliers International’s executive managing director, New York, told Commercial Property Executive. “The Times Square market is relatively healthy and there’s a lot of trends happening with pedestrian traffic and there’s some possibility to do some multi-level retail in the future.”
According to Murphy, there’s quite a bit of investment demand for New York product and favorable interest rates made this the perfect time for a deal.
Times Square Tower consists of 1.24 million square feet of rentable space and the property is currently 99 percent leased. The glass tower’s largest office tenants include Ann Taylor, with more than 320,000 square feet, law firm O’Melveny & Myers with 200,000 square feet and law firm Pryor Cashman with 100,000 square feet. Reports show that newer tenants are paying close to $80 a square foot.
“We are extremely pleased to form a new and important relationship with such a strong and reputable organization as Norges Bank, while at the same time once again demonstrating our ability to create and realize value for our shareholders through our development and management expertise,” Mortimer Zuckerman, Boston Properties’ executive chairman, said in a company statement.
The property is subject to a ground lease with The City of New York with 76 years remaining, and it benefits from a Payment In Lieu of Taxes (PILOT) program through June 2024.
The closing is subject to customary closing conditions.