REIT Drops $500M On 2 Chelsea Office Buildings After CEO Calls NYC 'Out Of Favor'
New York REIT's liquidation continues apace with the sale of two office buildings in Chelsea.
Columbia Property Trust is under contract to buy 245 West 17th St. and 218-220 West 18th St., which were initially offered in June as part of a four-property portfolio by New York REIT. The total sale price for the two buildings is just over $500M, according to Debtwire, as reported by The Real Deal.
The two buildings boast high-profile tenants, with Twitter anchoring 245 West 17th St. and subletting to Major League Baseball, and Red Bull occupying 218-220 West 18th St. for its New York headquarters.
New York REIT's most recent move in its liquidation was the sale of a minority share in One Worldwide Plaza in September to a joint venture of SL Green and RXR Realty.
Columbia's acquisition comes on the heels of its president and CEO, Nelson Mills, expressing concern for the New York market at a real estate forum on Sept. 28, as reported by The Real Deal.
“The New York office-based REITs are getting hammered,” Mills said at the event. “The public markets have spoken, and New York is out of favor for the time being.”
The worry about the New York office investment market is due to a combination of factors: rapidly rising interest rates, the unpredictability of the Trump administration, and new hesitance from foreign investors to buy into the market.
“I see it happening for China right now, they are trying to keep their money there. The banks are getting queasy about loaning to real estate of any kind, especially retail, and secondarily office,” Mack-Cali Realty Corp. Chairman William Mack told the forum. “I have grave concern that the next step will be a diminution of capital coming into the country or capital that is available in the country for real estate lending.”
