Ares Management is looking to sell its 50 percent stake in a Greenwich Village office building that its partner Normandy Real Estate Partners is planning to demolish and replace with a ground-up, Class-A office building.
The global alternative asset manager led by Michael Arougheti recently hired Cushman & Wakefield to find an investor that would either take the stake or part of it, sources told The Real Deal. The sale of the minority interest is expected to bring the total capitalization of the project to $250 million, or $1,300 per buildable square foot, sources said.
Normandy and Ares picked up the existing six-story, 138,000-square-foot office building at 797-799 Broadway for $101 million in 2016. At the time, the building was 98 percent occupied – with medical offices and small-time retailers – but the leases are set to expire next year at the latest.
Normandy is preparing to demolish the Class B building and instead construct a 190,000-square-foot Class A office property designed by Perkins Eastman. The developer is still looking to gather additional air rights from neighboring parcels, including BLDG Management’s retail building directly south at 795 Broadway, sources said.
Sources said Ares wants out because the fund it made the acquisition through is not set up for ground-up development.
Another partner on the property is Japanese real estate giant NTT Urban Development Corporation, which last year took a 15 percent interest in Normandy’s management platform.
The new boutique office building would have little competition in that section of Midtown South aside from Edward J. Minskoff Equities’ 51 Astor Place and Vornado Realty Trust’s 770 Broadway.
The existing property, located at the corner of East 11th Street, was constructed in 1853 as the St. Denis Hotel and converted in the 1920s to office. Cambridge Associates had owned it for 45 years before selling in 2016, records show.
A Cushman team led by Adam Spies and Doug Harmon is marketing the stake.
Normandy, Ares and the brokers declined to comment.
Normandy, a New Jersey-based investment firm, recently picked up a Long Island City development site and ABC Carpet & Home’s longtime headquarters at East 19th Street and Broadway.