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REIT makes FiDi investment

By Konrad Putzier

American Realty Capital’s New York City REIT (NYCR) has snapped up the FiDi office building 123 William Street for $253 million.

The seller of the 545,000 s/f property is East End Capital.

The purchase is the biggest one to date for the relatively new REIT. Founded in early 2014, it is one of two REITs under the American Realty Capital umbrella that focus exclusively on commercial properties in New York City.

The other, New York REIT, is a much larger, now publicly traded REIT that has been around since 2010 and has made several high-profile buys, such as the Twitter headquarters in Chelsea and One Worldwide Plaza.

Unlike its more prominent cousin, the non-traded REIT NYCR has so far been a more cautious investor.

123 William Street
123 William Street

The 123 William purchase is the trust’s fourth deal, according to its website. In November, it bought the office building 570 7th Avenue for $170 million. Earlier in 2014, it had bought the Laurel Commercial Condominiums on East 67th Street for $76 million and the Hit Factory Condominium on West 54th Street for $7.25 million.

123 William Street contains approximately 545,000 rentable square feet and is currently 81 percent leased. The property’s largest tenants include the State of New York, the City of New York, the United States of America, the Securities Training Corporation and McAloon & Friedman, P.C.

“We are very excited to be adding 123 William Street to our portfolio,” said Michael A. Happel, chief executive officer of NYCR. “The property is located in Downtown Manhattan, an important New York City submarket benefiting considerably from recent infrastructure improvements, especially with regard to transportation.

“The lobby and many important elements of the building have been substantially renovated, and we are acquiring the investment below its replacement cost. We see an opportunity to create near-term value at 123 William Street through leasing up the remainder of the building and marking below-market rents to current market levels as leases roll.”

NYCR is part of the American Realty Capital family, a large and confusing assemblage of REITs and financial firms that all sport different functions but have virtually indistinguishable names.

The conglomerate is the brainchild of Nicholas Schorsch. NYCR’s broker dealer is Realty Capital Securities, which is in turn a subsidiary of RCS Capital, a financial firm struggling with the fallout from accounting errors at one of its affiliated REITs, American Realty Capital Properties.

American Realty Capital Properties (ARCP), a publicly-traded REIT, is not to be confused with its former sponsor and manager, American Realty Capital.

The accounting errors and subsequent selloffs of ARCP and RCS Capital shares led Schorsch to step down from the boards of all 13 investment products he had been involved in. It wasn’t immediately clear how these developments have affected NYCR’s ability to raise capital.

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