Friday, November 17, 2006

Ernst & Young HQ in Manhattan to Sell for $1.3 Billion

CoStar Group - November 15, 2006

AVR Realty Co., a mid-sized firm based in Yonkers, NY, with a diverse portfolio of neighborhood shopping centers, mid-scale hotels, flex buildings and small office properties, is said to be close to landing the contract to buy the Big Kahuna in Manhattan -- the 1.1 million-square-foot tower at 5 Times Square.

A few months ago, Boston Properties announced plans to sell the trophy tower and tapped Eastdil Secured to formally market the property for sale. A number of high-profile buyers were linked to the property at one point or another, but the Yonkers firm headed by Allan V. Rose was not one of them. The somewhat surprising buyer, whose largest office property totals 350,000 square feet, is believed to be paying about $1.3 billion for the 37-story tower, as first reported in The New York Post.

A previous deal to sell the office tower fell through earlier this year with Dubai firm Istithmar. Boston Properties planned to sell the leasehold interest in the building in a package deal with 280 Park Ave. But, Istithmar walked away from the Times Square property citing a conflict of interest -- its auditor, Ernst & Young, is also the primary tenant at the tower. The financial firm leases about 976,000 square feet on a lease that runs through April 2022. The lease is valued at more than $1.2 billion, according to CoStar information.

There have also been rumblings that Istithmar didn't care for the tax incentives on the tower. The buzz back in April was that the rental income after taxes and the leasehold situation on the property killed the deal for the Dubai investor. The land beneath the tower is believed to be owned by New York State's development arm.

Presumably, AVR would still have to bring in a partner to take down the Times Square tower. Sphere: Related Content

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