Crown Acquisitions Inc and Highgate Holdings Inc are under contract to buy 650 Madison Avenue, an office tower in the heart of midtown Manhattan’s Plaza District in New York, in the biggest deal for a US building since 2010.
The companies agreed to pay US$1.3 billion for the 55,700m2 building, according to New York-based Crown. The sellers of the tower are investors led by Carlyle Group LP, a real-estate investment bank based in New York.
The purchase is the biggest of a single building in the US since Google Inc’s US$1.8 billion acquisition of 111 Eighth Avenue in late 2010 and it exceeds the record of US$1,583 a square foot (0.092m2) paid for 450 Park Avenue in 2007.
The price is largely a reflection of 650 Madison’s roughly 6,968m2 of retail space in one of Manhattan’s prime tourist and office areas, Carlton Group chairman Howard Michaels, said.
“You’re not going to find a more savvy group of investors than Highgate and Crown,” said Michaels, who represented another of the potential buyers. “This deal just affirms the desirability of the New York office and retail market.”
The area is known as the Plaza District because of its proximity to the landmark Plaza Hotel, two blocks west of 650 Madison. Some of the world’s most expensive retail space is nearby, including Apple Inc’s outlet at the General Motors Building across the street.
The current retail tenant at 650 Madison is a Crate & Barrel housewares store, under a lease that runs until 2019.
Crown managing principal Haim Chera said 650 Madison is not comparable to 450 Park because of its location at the center of a “retail triangle” created by Barneys to the north, Bergdorf Goodman to the west and Bloomingdale’s flagship Lexington Avenue store to the east. Those stores, plus Apple, combine for about US$2 billion worth of annual sales, he said in a telephone interview.
“We expect to achieve a retail value of close to US$1 billion on this asset, giving us a basis of about US$300 million in a trophy office building,” he said.
The new owners will discuss “reconfiguring” the Crate & Barrel space in an effort to unlock some of the value, he added.
The buyers intend to borrow only about half the purchase price, meaning they intend to have about US$650 million of equity in the property, with the rest in a senior mortgage, Chera said.
Eastdil Secured LLC’s Adam Spies and Douglas Harmon were the brokers on the deal.
Carlyle, based in Washington, and a partner paid US$680 million for the building in 2008, research firm Real Capital Analytics Inc said. The owners finished renovating the building earlier this year and completed more than 37,160m2 of leases.
“This is a great outcome for our investors and validates our opportunistic approach,” Robert Stuckey, managing director and head of US real estate at Carlyle, said in a statement.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is