Fried Frank Executes 3 Transactions in 2 Days

By Gail Kalinoski, Contributing Editor

Jonathan Mechanic

It’s been a busy time for the lawyers in the Real Estate Department of Fried, Frank, Harris, Shriver & Jacobson L.L.P. in New York City as three major deals closed within two days, including the sale of Stuyvesant Town-Peter Cooper Village in Manhattan to The Blackstone Group and Ivanhoé Cambridge for $5.3 billion.

The sale of the 11,232-unit residential property – the largest apartment complex in Manhattan – was just one of three transactions closing between Thursday, Dec. 17 and Friday, Dec. 18. The firm was also involved in the $3.2 billion sale of a top industrial portfolio owned by Exeter Property Group and the $540 million sale of the leasehold interest in the Doubletree Guest Suites Times Square hotel to Maefield Development, which is planning a major redevelopment at the site and restoration of the Palace Theater.

“It was that kind of Friday,” Jonathan Mechanic, partner and chairman of the Fried Frank Real Estate Department, told Commercial Property Executive.

Fried Frank and Venable L.L.P. acted as co-counsel to CWCapital Asset Management, which is owned by Fortress Investment Group L.L.P., in the sale to the partnership of Blackstone and Ivanhoé Cambridge, a real estate subsidiary of a leading Canadian institutional fund manager. On the Fried Frank side, Mechanic and partner Janice MacAvoy led the team that also included real estate associate Alexander Sutherland.

One of the largest single real estate transactions in the city’s history, the complex deal involved the seller, the buyers, city officials, tenants and Fannie Mae. Under a binding agreement with the city, Blackstone agreed to keep nearly 5,000 units below market rents until at least 2035.

“Blackstone was the perfect buyer,” Mechanic told CPE. “They were sensitive to the city’s concerns with respect to affordable housing and to the tenants’ concerns. They had the appropriate capacity to write the check. They did a good job managing all the different aspects in getting it to closing.”

Mechanic said the deal, announced in late October, got done “in record time.”

“Everybody wanted the deal to happen. The mayor wanted it to happen. The tenants were supportive. All the stars were aligned,” he said.

Mechanic declined to comment on a report in The New York Times that SL Green Realty Corp., New York City’s largest commercial landlord, threatened a lawsuit that could have derailed the deal.

He was more forthcoming about the sale of the leasehold interest in the Doubletree Guest Suites Times Square hotel from Sunstone Hotel Investors, a California-based lodging REIT, to Maefield Development, a privately owned real estate company headquartered in Indianapolis, for $540 million. Sunstone officials said the sale of the 468-room hotel at 1568 Broadway was part of its plan to selectively dispose of assets to unlock shareholder value. Maefield plans to redevelop the property with a new 704-room luxury hotel, four floors of retail and 40,000 square feet of entertainment space, according to The Wall Street Journal. In a unique part of the plan, Maefield has worked with the Nederlander Organization, which owns the historic Palace Theater, on a deal to renovate the theater and also raise it up 29 feet as part of the $2 billion redevelopment project, WSJ reported.

The New York City Landmarks Commission has already approved the plan to elevate the theater, Mechanic said.

“This is one of the more exciting deals I’ve done,” he told CPE. “It will change the whole complexion of that area.”

Mechanic said joining him on the team for the Doubletree acquisition representing Maefield were partner Avi David Feinberg, corporate real estate partner Fiona Kelly, real estate partner Melanie Meyers and real estate associate Tony Shaskus.

Fried Frank partner Chris Roman led the team, which included corporate partner Lee Parks, that handled the Exeter deal. At $3.15 billion, it was one of the largest industrial transactions of the year. Fried Frank represented Exeter, a Plymouth Meeting, Pa., real estate investment firm that specializes in industrial properties. The firm sold a 58 million-square-foot industrial portfolio with 209 assets held by investment funds owned and managed by Exeter to a joint venture of Henley Holding Co., a wholly-owned subsidiary of the Abu Dhabi Investment Authority, and the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers. Exeter is also invested in the JV and will continue to manage the properties that are located in 25 key distribution markets throughout the United States.

Joining Fried Frank as co-counsel to Exeter was Silverang, Donohoe, Rosenzweig &  Haltzman, L.L.C.