APF Properties has taken 100 percent ownership of The Club Row Building at 28 West 44th Street, buying out the 80 percent equity stake held by Prudential Real Estate Investors (PREI) valuing the property at $235 million.
Kenneth Aschendorf, principal of APF Properties, said, “We knew what was in our hands and we were not going to let it slip away. The opportunity to buy a property of this caliber in an off-market transaction was a dream situation that was too compelling to pass up.” Aschendorf said the successful partnership with PREI had facilitated the leveraging of institutional capital to reposition the property and add value.
“We could have easily exited the asset now along with our partner and reaped a substantial immediate profit,ˮ he added. However, we see a ‘Part II’ to this investment where we can capitalize on the transformation that has been completed. APF Properties has a longer term perspective versus that of the investment fund which has achieved its goals, and we believe this will bear fruit for years to come.”
“After learning of PREI’s decision to monetize their gains, our initial goal was to pursue an institution to replace them,” added Aschendorf.” It did not take much analysis for APF Properties to realize that the best route would be to “de-institutionalize” the investment.
“Instead of going for the quick profit, we decided to step up in a big way and substantially increase our own personal investment in the building and buy out Prudential in a transaction that greatly benefits all parties.”
The market for Class ‘B’ office buildings in Midtown has gone up substantially since APF Properties finalized its valuation in July.
The Grand Central office market has seen less appreciation than other areas and, according to APF Properties’ research and outlook, is poised for increased rental rates.
The asset itself has been upgraded significantly and Club Row – as 44th Street between 5th and 6th Avenues is called – has become a prime block more akin to an Avenue than a side street.
“We are poised to take advantage of a strengthening leasing market with a new starting point by offering tenants this ‘best in class’ Class B+ LEED Gold Certified building we created, which currently offers a diversified tenant base,” Aschendorf added. “Add to that the combination of our expertise as an owner of four buildings in this micro-market and the dynamics of the broader Manhattan market, and we believe we have a recipe for continued NOI growth.”