Columbia Property Sells Manhattan Office Asset for $333M

NYU Langone Medical Center has a 30-year triple net lease for the 390,000-square-foot building, which was recently converted for use as a multispecialty ambulatory care facility.
222 E. 41st St. f
222 E. 41st St.

A 25-story Midtown Manhattan office tower fully leased by NYU Langone Medical Center has changed hands, with Columbia Property Trust selling the 390,000-square-foot building to Commerz Real for $332.5 million.

Commerz Real, a fully owned subsidiary and real estate investment manager of Germany-based Commerzbank AG, purchased the building at 222 E. 41st St. for its hausinvest open-ended real estate fund. Located three blocks from Grand Central Terminal, the tower was built in 2001 by Tishman Speyer. Columbia Property Trust acquired the building in 2007 for $319.8 million, according to Yardi Matrix data.

When law firm Jones Day, the building’s sole tenant, announced it was leaving in 2016, Columbia launched a proactive and wide-ranging marketing campaign. In May 2016, NYU Langone Medical Center signed a 30-year, triple net lease for the property, including all 25 floors, lobby, common areas and parking garage. Over the past two years,  NYU Langone has been converting the office building into a multispecialty ambulatory care facility that began accepting patients in April. The creative transaction between Columbia and NYU Langone, arranged by CBRE for the landlord and by Cushman & Wakefield for the tenant, resulted in Columbia receiving a 2017 CPE Distinguished Achievement Award for Best Lease in 2016.

“We were very pleased to secure an esteemed tenant on a long-term lease, which significantly increased the value of the property. Proceeds will further strengthen our balance sheet in the near term and will eventually be recycled into higher growth investment opportunities,” Nelson Mills, Columbia president & CEO, said in a prepared statement.

CBRE’s Capital Markets team, including Darcy Stacom and Bill Shanahan, represented Columbia in the marketing effort and transaction.

Long-term commitment

Commerz Real cited the triple net lease with a strong tenant like NYU Langone as a key factor, along with the Midtown location, in its decision to acquire the property. The firm noted world-famous skyscrapers like the Chrysler Building and the MetLife Building are in the same submarket and pointed to new development projects, such as One Vanderbilt, the 58-story, 1.7 million-square-foot trophy office tower being constructed adjacent to Grand Central Terminal.

“We plan to retain this premium property in the long term, if only for the outstanding location and excellent lease agreement. Thus our investors can best profit from rising rental income and future value appreciation,” Henning Koch, Global Head of Transactions at Commerz Real, said in a prepared statement.

Columbia’s Manhattan Moves

The deal comes several months after Columbia expanded its New York City portfolio with the $514 million purchase in October 2017 of two adjoining fully leased Class A office buildings located at 245-249 W. 17th St. and 218 W. 18th St. in the Chelsea submarket. New York REIT was the seller of the buildings, which serve as the New York City headquarters for Twitter and Red Bull, along with several other tenants. Also in 2017, Columbia acquired 149 Madison Ave., a 12-story 127,000-square-foot Class B office building in the Midtown South submarket, for $87.7 million.

Columbia’s portfolio, concentrated in New York, San Francisco and Washington, D.C., includes 19 properties totaling approximately 9 million square feet. Other Manhattan assets include 114 Fifth Ave., and 315 Park Ave. S. The REIT also owns 95 Columbus in Jersey City, N.J.

Image courtesy of Columbia Property Trust