By Daniel Geiger
Declaration Management, a subsidiary of the life insurance company John Hancock, has acquired four office floors in the Setai Wall Street, the company announced. Though executives at the firm wouldn’t confirm the price of the deal, sources say that the space was sold for roughly $10 million.
“We’re very excited about the developments in Lower Manhattan and that’s part of our rationale for this investment,” said Michael Kelley, the head of Declaration’s commercial real estate group. “It’s an exciting place to have exposure.”
The company, which Kelley said is in the midst of other acquisitions in Manhattan, is teaming with the real estate services firm Cassidy Turley in the deal, which will co-invest as a minority partner and act as leasing agent for the space.
Sources familiar with the property say that floors four and five are largely filled with office tenants but that six and seven are vacant, offering the new owners a chance to lease up the space during a period when rents have been on the rise.
Declaration purchased the office floors, which total about 70,000 s/f, from the investment company Waterbridge Capital. Waterbridge itself only bought the first seven floors of the 34-story, nearly 300,000 s/f building in April for about $17 million and is essentially flipping a portion of its acquisition through the sale.
The building, located at 40 Broad Street, had been owned by the real estate investment company Zamir Equities up until this year, which had purchased the property during the real estate boom and converted floors eight to 34 into residential condos, before losing control of the project during the recession.
Zamir also brought the high-end club, the Setai, to occupy space lower in the building and kept floors four to seven for office users. During the downturn in the real estate market, Zamir defaulted on its mortgage for the residential space and the lender for the project, Anglo Irish Bank, sold off the debt, which had an outstanding balance of $147 million, to the investor Zeil Feldman, for around $80 million. Feldman took control of the unsold residential space earlier this year and soon after, Zamir sold the base of the building to Waterbridge.
Sources say that Waterbridge will continue to own floors two to four, which house the Setai’s restaurant, spa and gym. The company is marketing a small retail space for sale on the ground floor sources say. Executives at Waterbridge couldn’t be reached for comment.
Declaration will be active in the Manhattan market, Kelley said. In a conversation with Real Estate Weekly, he revealed the firm is in contract to buy a hotel in midtown and a mixed use building in Upper Manhattan. He said that Declaration is an opportunity fund that focuses on deals that require an equity investment of up to about $25 million.
