Empire Capital, a London-based private investment fund known for acquiring discounted office properties, is reportedly set to purchase two Midtown South buildings — 381 and 373 Park Ave. S. — for $130 million. These pre-war buildings have been owned by the Hemmerdinger family’s ATCO Properties for decades.
A Newmark team, including Adam Spies, Adam Doneger and Meaghan Philbin, brokered the transaction.
The two Manhattan office spaces, located between East 26th and East 27th streets, collectively span approximately 337,000 square feet and are currently 57% occupied. The larger of the two, 381 Park Ave. S., boasts ceiling heights up to 16 feet, making it a potential candidate for residential conversion.
Among the current tenants at 373 Park Ave. S. are sports betting firm Simplebet and Mount Sinai Health System. Meanwhile, 381 Park Ave. S. houses literary scout Maria B. Campbell Associates; children’s book publisher Lee & Low Books; and gold dealer Sepp Leaf Products.
Josh Rahmani and Ebi Khalili, the founding partners of Empire Capital, have been among the most active investors seeking out discounted office buildings since the pandemic and the rise of remote work began to depress property valuations.
Earlier this year, Empire secured a deal to acquire two Garment District office buildings through a short sale for less than $50 million — a significant 68% discount from the $157 million Investcorp paid for them in 2017. Then, in September, the company (in partnership with Namdar Realty Group) also purchased a Hell’s Kitchen office building for $40.5 million, which was 73% less than the $153 million that Related Fund Management dished out in 2018.
As is often the case, some of the deals failed to live up to expectations. For instance, in 2021, Empire and Namdar collaborated to purchase the 25-story Garment District building at 345 Seventh Ave. for $107 million. But, just three years later, the building’s occupancy has declined, leading the owners into discussions to transfer the property to their lender, Benefit Street Partners. As a result, this past January, the partners sold the building for $85 million to The Katan Group, Mike Kohan of Kohan Retail Investment Group and investor Ilya Mikhailov, who intend to convert it into residential use.
