Prolific NYC real estate investor David Werner has finally completed the complex real estate puzzle underpinning his planned residential conversion of Pfizer's former Midtown Manhattan headquarters.
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The firm paid $140M to the estate of late real estate investor Bernard Kayden for the land underneath the office building at 235 E. 42nd St., according to documents filed Wednesday. Pincus Co. first reported the transaction.
The $140M was a final payment to acquire the property, on top of unspecified additional payments Werner had previously made to the Kayden family, according to a source familiar with the transaction.
Werner and his partner, Nathan Berman's Metro Loft Management, already seized control of 219 and 235 E. 42nd St. and have moved forward with transforming the two-building office campus into approximately 1,600 rental units, the largest planned conversion in the city.
In 2018, Werner bought the leasehold for 235 E. 42nd St. from Pfizer in a $228M deal that was part of a partnership with life sciences developer Alexandria Real Estate Equities. They also acquired 219 E 42nd St., the smaller building next door, for $142M, according to public records. Pfizer occupied both buildings but agreed to a five-year leaseback.
Werner extended the ground lease in 2021 with the Kayden family at 235 E. 42nd for 60 years in a transaction that was valued at $425M.
As Pfizer’s lease was expiring, it chose to relocate to Tishman Speyer’s The Spiral office building at 66 Hudson Blvd. In 2023, ARE told investors that it planned a 350K SF conversion into life sciences uses.
Last year, the REIT abandoned those plans and sold 219 E. 42nd St. to Werner for $60M. SEC filings show that ARE sold 100% interest, indicating that Werner didn't previously have a stake in the property.
The latest transaction grants Werner full control over both buildings. Berman told Commercial Observer in October that the developers were “on a path” to acquiring the land.
“We currently have the entire site and we are busy demoing and abating,” he said at the time.
A memorandum of lease also filed Wednesday stated that a new ground lease to Werner and Berman's venture commenced Jan. 28 at 235 E. 42nd St. and will run through 2117.
The vacant 33-story tower will have about 910 of the conversion's units, in addition to amenity space and retail, according to an announcement by David Werner Real Estate Investments’ lender, Northwind Group.
The private equity firm and debt fund manager provided a $135M acquisition loan for the fee interest sale. Northwind also provided $75M of acquisition financing to Werner for 219 E. 42nd St.
“We are impressed by the progress they have made at both properties in such a short time,” Northwind founder and Managing Partner Ran Eliasaf said in a statement to Bisnow. “As the lender on the fee in the most senior position in the capital stack, we are committed to supporting investors looking to provide more housing to the New York City market.”
DWREI Vice President Chaim Kowalsky did not respond to Bisnow’s request for comment.
UPDATE, FEB. 21, 4:30 P.M. ET: This story has been updated with additional information about the terms of the purchase.
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