In an investor presentation filed Tuesday with the Securities and Exchange Commission, General Growth Properties provided some details on its anticipated acquisition of 200 Lafayette in New York City’s SoHo District.
Originally built in 1893, 200 Lafayette is a 7-story, 116,000 square foot building with retail space in the basement and on the first and second floors. Floors 3 – 7 are office space. The asset is fully leased to JC Penney.
The strategy for value creation in the deal is to convert the space up to level 4 into high quality retail space. The Chicago-based REIT says the building’s 200 square feet of street frontage represents a potential flagship opportunity.
General Growth also expects to re-tenant the building at rents that are about 35 percent above in-place rents.
The off-market acquisition is expected to close this year, General Growth reports, at the gross purchase price of $150 million. General Growth says it anticipates the going-in cap rate to be 5.2 percent, assuming there are no tenancy changes, and that it will finance the deal at up to 50 percent loan-to-value.
A September 18 story from Lois Weiss in the New York Post says the seller is a Jared Kushner-led group that acquired the building for $50 million and subsequently invested $30 million on the property. The new owners then signed JC Penney to a triple-net 15-year lease for the entire building with options that run through January 2029.
Citing CoStar, Weiss reported that the building’s 6th floor is available for sublease and the majority of the retail space is still empty.
Weiss says JC Penney’s lease includes expenses and property taxes plus about $60 per square foot for the office space and $90 per square foot for the retail with yearly increases.