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BXP To Pay $280M For 27% Stake In Flatiron Office Tower

200 Fifth Ave.

Boston Properties has entered into an agreement to acquire a stake in a 14-story Manhattan office property for $280.2M.

The real estate investment trust, the largest publicly traded owner of office buildings in the country, has a deal in place to buy a 27% stake in 200 Fifth Ave., it disclosed in its quarterly earnings statement Tuesday. The building is owned by a joint venture of L&L Holding Co. and J.P. Morgan Asset Management.

The $280.2M price tag includes $120.1M in cash, in addition to Boston Properties’ pro rata share of the property’s outstanding $160.1M mortgage, which has a 4.34% interest rate and matures in November 2028.

As part of the deal, BXP will provide leasing services for the 870K SF building, as well as acting as the property manager as part of the joint venture with L&L and J.P. Morgan.

L&L, led by CEO David Levinson and President Robert Lapidus, acquired the property, then known as the International Toy Center, alongside Lehman Brothers in 2007 for $480M. J.P. Morgan acquired Lehman's stake in the building in 2011.

BXP's purchase of a 27% stake would value the historic building, which was constructed in 1909 and renovated in 2008, at just over $1B. It is approximately 93% leased, BXP said in its earnings report, but the building is facing upcoming occupancy losses.

L​​uxury jeweler Tiffany & Co. announced in May that it was shrinking its lease in the building from 400K SF to 287K SF. Yelp, which has a 70K SF lease in the building, also said it plans to let its lease expire in 2024 and is looking for a sublessee in the meantime.

Boston Properties expects to close the acquisition during Q4 this year, according to the release. The acquisition of 200 Fifth Ave. is Boston Properties’ second within 12 months in Midtown South.

The REIT closed on its acquisition of 360 Park Ave. S, a 20-story, 450K SF office tower on the edge of NoMad, for $300M in December last year. Boston Properties planned to complete upgrades turning the property into a Class-A space, according to a release published at the time.