AVRS Takes 11% Stake in BXP-Owned Office Tower
AVRS Partners acquired an 11% stake in a planned 46-story, Class-A, Manhattan, N.Y., office space owned by BXP. The 930,000-square-foot development project at 343 Madison Ave. is set to be completed by 2029 and will cost an estimated $2 billion.
“We are pleased and honored to expand our relationship with AVRS Partners through this investment,” said BXP Chairman & CEO, Owen Thomas, in a statement.
The two companies have a history of working together: They share ownership of the General Motors Building at 767 Fifth Ave., a Manhattan landmark currently valued at $3.7 billion, according to recent filings.
AVRS Founder, Edmund Safra, made a point of highlighting the importance of this partnership following this latest deal: “BXP has been a valued partner to my family for more than a decade.”
During the summer, BXP obtained a $1.2 billion construction loan for the property that carries a variable interest rate, dependent upon construction and leasing benchmarks being met. The financing has a four-year term with a one-year extension option. Wells Fargo was the main lender, joined by the likes of BofA Securities, Bank of New York Mellon and JPMorgan Chase.
The project has faced some headwinds since its inception. For instance, Norway’s sovereign wealth fund, Norges Bank, pulled out of its commitment to be a 45% partner for the construction of 343 Madison.
Nevertheless, interest for the project remains high with the owners managing to secure several important tenants. To that end, last December, insurance firm Starr signed a deal to lease 275,000 square feet within the planned office tower. The company then expanded its initial footprint to a total of 320,000 square feet across 14 floors, becoming the project’s anchor tenant.
Chicago-based law firm McDermott Will & Schutte also signed up for 150,000 square feet at 343 Madison last summer, and BXP is currently in negotiations for two more tenants. If successfully closed, these deals would bring the property’s occupancy rate up to 70%.
Diana Sabau
Senior Content Writer, CRE News & Market Analysis
Drawing on years of intense research in the U.S. commercial real estate market at Yardi Matrix, Diana now applies her expertise as a writer for the CommercialCafe blog. Her articles focus on CRE investment, labor market trends, and technology, and have been picked up by prestigious publications including the New York Times, GlobeSt, The Real Deal, NAIOP, MSN, and Bisnow.
