Two Rector St. in Lower Manhattan Gets New Ownership Group

A joint venture between MEPT and Cove Property Group has acquired the 26-story office tower for a reported $225 million.

By Gail Kalinoski

Two Rector St., New York
Two Rector St., New York

New York—A 26-story, 476,000-square-foot office building at 2 Rector St. in Manhattan’s Financial District has changed hands again for a reported $225 million, nearly three years after it was acquired for about $140 million by CIM Group and Kushner Cos.

The Art Deco building constructed in 1907 was purchased by a joint venture of Multi-Employer Property Trust (MEPT), advised by Bentall Kennedy LLP, and Cove Property Group LLC, which plans to renovate and reposition the asset as Class A offices. Neither the new owners nor the sellers would publicly release the sales price, but numerous local media, including the New York Post, put the figure at approximately $225 million or about $480 per square foot.

“We are very excited to work with Cove as our partner on this acquisition. Two Rector Street provides a tremendous opportunity to own and redevelop a unique Art Deco building in one of the most renowned and resurgent office submarkets in the world,” Kevin Rivest, senior vice president of transactions at Bentall Kennedy, said in a prepared statement. “The Financial District, and more specifically the World Trade Center area, has reemerged as a 24/7, highly amenitized live/work/play environment and we expect this trend to continue.”

David Antonelli, executive vice president & MEPT portfolio manager at Bentall Kennedy, said in a press release that the acquisition brings MEPT’s total investment in the New York market to over $1.3 billion and more than 2.1 million square feet. MEPT owns 1.5 million square feet of office space, 665 multifamily units and an industrial development in the New York metro area.

“This acquisition reflects the Fund’s primary urban market investment strategy,” Antonelli said. “Two Rector Street aligns exceptionally well with the Fund’s focus on responsible investment in transit-oriented locations serving knowledge industry tenants.”

A press release from the buyers noted they plan to redesign the lobby, and install new elevators and mechanical systems.

“We are in the planning stages now and cannot comment on budget, but our intent is to complete a comprehensive renovation of the building to bring it up to Class A standards,” a spokesperson for the joint venture team told Commercial Property Executive.

“We are confident that the property will attract the highest quality tenancy,” Kevin Hoo, founder and managing partner at Cove, noted in a news release.

The new ownership team declined to name current tenants but said occupancy is less than 50 percent and noted that was part of the attraction to the building.

“It is much more difficult to execute a comprehensive renovation of an office building when it is highly occupied, so the current status of the building represents a compelling opportunity to fully renovate the property and then immediately capitalize on that investment by leasing space that can meet a variety of tenant size requirements in the market,” the spokesperson told CPE.

The building offers flexible and divisible 14,000 to 18,700 square-foot floor plates in a U-shaped floor plan. It has an ornate façade that has been preserved by the Trust for Architectural Easements (formerly known as the National Architectural Trust). The property, which also has ground-level retail, spans the full block on Rector Street and also has frontage on Trinity Place and Greenwich Street. It is across from the historic Trinity Church and within blocks of the new World Trade Center site. The building is also near several subway lines, ferry services, PATH trains to New Jersey and the new WTC transit hub.

“The Art Deco aesthetics, unique layout and six sides of light and views make Two Rector Street a truly unique office tower located in the most conveniently accessible area of Manhattan,” Hoo said.

CIM Group and Kushner Cos. had owned the office building since June 2013, when it was acquired for a reported $140 million from Savanna, which had owned the majority interest and control through a partnership with Stellar Management since 2012. Savanna had acquired part of the property’s first mortgage from a bank in late 2007 and in 2009 originated a mezzanine loan for the building.

Last year, CIM Group and Kushner Cos. were rumored to be considering converting the building to residential and creating 452 apartments. It is not clear why that plan fell through and they decided to instead sell it for office use.