A difficult office leasing environment is forcing the sale of Savanna’s 360 Lexington Avenue, five years after the private equity firm acquired the property.
Barclays and PPM America are putting the 24-story Midtown East property up for sale, the Commercial Observer reported. A Newmark team including Adam Doneger and Adam Spies are leading the sales process.
The office spans 269,000 square feet and is located near Grand Central Terminal, a surging Manhattan market. That may have had something to do with the lenders’ decision to provide $110 million to Savanna back in 2019.
Finding tenants hasn’t been easy for Savanna, though. The largest tenant is believed to be Webster Bank, an existing tenant which signed a new lease for 31,000 square feet in 2022; the asking rent for the 10-year deal was $69 per square foot. The property is only 60 percent leased.
It’s unclear what tipped Savanna into default and what the lenders are hoping to recoup in a property sale. Newmark declined to comment to the Observer, while Savanna didn’t respond to a request for comment.
Savanna purchased the property from AEW Capital Management in 2019 for $180 million, or roughly $720 per square foot. At the time, the building at the corner of Lexington Avenue and East 40th Street was 82 percent leased.
Read more
Commercial
New York
Savanna hands Harlem office building back to lender
Commercial
New York
Savanna in contract to buy Midtown East office building
Commercial
New York
“No one is immune”: Savanna dragged down by office market
Savanna is one of several major New York City landlords who find themselves plagued by high interest rates, lower valuations and an office occupancy situation that may never recover to pre-pandemic levels due to the rise of remote work.
In December, Christopher Schlank and Nicholas Bienstock’s firm signed over a 135,000-square-foot Harlem building to lender TPG Real Estate Finance Trust for a deed in lieu of foreclosure. Last summer, it transferred a 40 percent stake in 110 William Street to its partner at the 31-story office building after the property’s loan went into default and was extended.
Savanna did manage to negotiate loan extensions at other office properties, including 521 Fifth and the Falchi Building at 31-00 47th Avenue in Long Island City.