Rewind to 2012, when joint venture partners New York Life Real Estate Investors, Prudential Real Estate Investors and Normandy Real Estate Partners shelled out $360 million on the acquisition of the Midtown Manhattan office tower at 575 Lexington Ave. Now, fast forward to today, and the partners have just sold the 745,000-square-foot property to Angelo, Gordon & Co. L.P. for $510 million.
After purchasing 575 Lexington three years ago, New York Life et al conducted an extensive renovation program, and with the help of architecture and design firm Mancini•Duffy, transformed the 35-story high-rise into the star property it is today. The team also worked its magic on the tenancy and achieved such successes as a renewal and expansion agreement with Cornell University, which expanded its occupancy to 212,000 square feet under a lease that won’t expire until 2028.
And with 575 Lexington now in tip-top shape, the timing was right to reap the rewards of the 57-year-old building’s rebirth. “The partnership acquired the property on the premise of finding value in an asset in a gateway central business district in need of major renovations and repositioning to a first class office building through capital upgrades and leasing. We have executed on that business strategy and were able to successfully capitalize on that value creation,” Daniel Davitt, senior director with New York Life, said in a prepared statement.
The 575 Lexington trade further enhances what is shaping up to be a standout year in the New York City office sector. According to a recent report by real estate investment services firm Marcus & Millichap, the investment sales market is on track to experience its most active year on record, with 337 completed transactions totaling $33.5 billion as of the end of July.