Cheap Commercial Real Estate Fish Stories

Got $100,000? Buy a Skyscraper | NBC New York

This article on NBC's New York News beta site would have you believe that things are so bad in the US right now, that you could buy a Sixth Avenue skyscraper for $100,000 US. While prices are getting very low on these kinds of assets and Real Capital Analytics claims that there is as much as $86B US worth of at risk property, I did a little digging and found some details on this particular transaction.

I was intrigued because a Canadian Pension Fund unit was the purchaser of a landmark location in the Manhattan, and the patriot in me wanted to know the details of how they managed to pull this coup off.

Turns out that magante, Harry Macklowe bought the building, located at 1330 Avenue of the Americas, two years ago for an estimated $498M. When a loan secured by the property for $130M was defaulted upon, the bank seized the property and sold it to Cadim.

The loan was sold to Cadim, Canada's largest pension fund, and transferred to the subsidiary Otera Capital. Otera took over the loan and the tower's $240 million mortgage. The building, in the middle of the country's most lucrative commercial district, is two-thirds leased; its most prominent tenant is the Financial Times newspaper, sporting a pink `FT' logo on its rooftop.

"We had some confidence that the building is a good building, and with patience we would be OK," said Marie Giguera, an Otera vice president.

Entire news article here.

So, while this is definitely a great move for Cadim and Otera, it wasn't the $100,000 fire sale some would have you believe.