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Epic LLC to buy Vornado retail properties for around $80 million

1:12 pm, November 2, 2011

by Daniel Geiger

Investor Steven Elghanayan is in talks to buy a retail portfolio from the large commercial landlord Vornado Realty Trust according to sources.

Elghanayan will purchase a group of Soho buildings, 386 and 387 West Broadway and 40 Thompson Street and also a building near Union Square, 25 West 14th Street, in the deal, which people familiar with the transaction say could enter into contract by today.

Although an exact purchase price wasn’t available by press time, sources say that Elghanayan will pay around $80 million for the four properties.

An investment sales team from the real estate services firm Cushman & Wakefield led by company executives Nat Rockett and Helen Hwang marketed the buildings for Vornado and negotiated the sale. Neither could not be reached for comment. Elghanayan, who operates a real estate company in partnership with his brother called Epic LLC, didn’t return calls or emails seeking comment.

25 West 14th Street was constructed in the late 1990s and is home to the national retail chains, the Guitar Center and a Levis store on the ground floor. A fitness center called CLAY occupies the second level.

386 and 387 West Broadway together have about 13,000 s/f of retail space and 40 Thompson Street is a nearly 40,000 s/f building with ground floor retail space that sports frontage on both Thompson and Wooster Streets. The Soho component of the portfolio has pockets of vacancy.

Originally the portfolio also included a 25,000 s/f retail condo that Vornado owns at 201 East 66th Street that is currently filled by The Gap and Sephora. But The Gap is set to soon vacate its space and offers for this portion of the portfolio came up short of Vornado’s pricing expectations. The company, which is one of Manhattan’s largest commercial landlords, decided to remove the property from the sale and lease it up itself with an eye on bringing the condo back to market with stable tenancy in place so that it can hopefully fetch a higher number.

The deal offers Elghanayan a more manageable level of vacancy and also stable in place rental income at a time when some investors are beginning to again turn a wary eye towards empty space because of renewed concerns about the health of the economy.

Elghanayan is a cousin of the well-known Elghanayan brothers Tom, Fred and Henry, who operate the real estate companies TF Cornerstone and Rockrose Development. Steven Elghanayan has been a busy investor in recent months.

Earlier this year, he paid $70 million to buy 15 Little West 12th Street, a newly construction 70,000 s/f building in the Manhattan’s trendy Meatpacking District, from Taconic, the real estate company that constructed the property. Although its acquisition equated to a pricey $1,000 per s/f, 15 Little West 12th Street has attracted lucrative rental deals. A technology firm called Palantir arranged to take the building’s fourth and fifth floors, about 30,000 s/f, for rents around $70 per s/f. A team from Newmark Knight Frank led by one of Newmark’s top leasing brokers David Falk arranged that transaction on behalf of Elghanayan.

Speaking to Real Estate Weekly after he purchased 15 Little West 12th Street, Elghanayan said that he would continue to remain active.

“We decided last year to start investing more in Manhattan,” Elghanayan said at the time.“We felt it was a good opportunity after the market came down in ‘08 and ’09.”

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