Savanna Buys 799 Broadway For $255M, Slightly Less Than Building's Debt
An office investor grappling with distress in pockets of its portfolio dropped a quarter-billion dollars to take advantage of someone else's.
Savanna paid $255M to acquire the 177K SF office building at 799 Broadway, which the Manhattan-based firm called a “deeply discounted price.” The seller was a joint venture of Columbia Property Trust and Cannon Hill Capital Partners, which developed the building in 2022.
Savanna Managing Partner Kerry Powers called the building “a perfect addition to our portfolio of exceptional office assets” in a statement.
“This building is also representative of the opportunities Savanna continues to pursue, acquiring some of the very best real estate in New York City at extraordinarily discounted prices given the current turbulence in the market,” Powers said.
The sale was for about 4% less than the $266M of debt tied to the building, according to Commercial Observer, which first reported the deal. Blackstone Mortgage Trust issued the loan in 2022 and facilitated the sale to Savanna.
“This is a great outcome for our investors and delivers on our strategic priority to resolve impaired assets above our carrying values,” a Blackstone Mortgage Trust spokesperson told Commercial Observer.
A Blackstone spokesperson didn't respond to a request for comment. Columbia Property Trust, a subsidiary of Pimco, declined to comment.
Columbia and Cannon Hill developed the building for roughly $300M. Cannon Hill's predecessor, Normandy Real Estate Partners, acquired the property for $101M in 2016 in a joint venture with Ares Management, and Columbia bought Ares' stake in 2018 in a deal that valued the development site at $145.5M, according to city property records.
The building is 71% leased with a weighted average lease term of more than 11 years, Savanna said in the release. Its tenants include Wellington Management, Bain Capital Ventures and music streaming platform Tidal.
Columbia acquired Normandy for $100M in 2019, then spun out Normandy's funds into independent real estate firm Cannon Hill in 2022. Pimco acquired Columbia Property Trust in 2021.
The former REIT bet big on the Midtown South area of Manhattan, which was the hottest office market of the city before the pandemic because of its appeal to tech companies. Many of those properties have fallen into distress, and 799 Broadway isn't the first loss it has had to swallow. It sold 149 Madison Ave. last year for more than a $10M loss.
It also has been grappling with the fallout from defaulting on a $1.7B loan tied to seven properties in four cities. It landed an extension on that debt in May after an appraisal wiped off $700M in value from the portfolio. That loan now matures in July 2025 with a six-month extension.
Savanna has also taken some lumps in its office portfolio. It is facing a possible foreclosure on the $242M loan backed by 521 Fifth Ave., Crain's New York Business reported last week. It lost its equity stake in the Financial District office building 110 William St. last year when its partner in the building restructured the debt.
CORRECTION, NOV. 19, 9:15 P.M. ET: Commercial Observer first reported the sale of 799 Broadway to Savanna. A previous version of this story misstated which publication broke the news. This story has been updated.
