Bank pays $300m to purchase Murray Hill's 135 W 50th Street.

UBS Bank has acquired 135 West 50th Street from Murray Hill Properties for what a source familiar with the transaction revealed was a purchase price of over $300 million, nearly double what Murray Hill paid for the building two years ago.

Murray Hill co-founder and partner, Norman Sturner, confirmed the sale but would not disclose its exact dollar amount. Sturner, who purchased the property in July 2004 from the estate of Dr. Laszlo Tauber for $160 million, said that Murray Hill will continue to act as the building's managing agent.

UBS Bank confirmed the deal as well, but would not comment otherwise. The sale comes after a number of significant leasing deals in the building, the most recent of which was with tenant Alliance Capital Management, who renewed two floors it occupies and leased an additional two floors, an expansion that brings its presence in the building to roughly 220,000 s/f, according to Sturner.

Some sources indicated that the 800,000 s/f building's sale was at least partially contingent upon that lease's completion, something that neither UBS nor Sturner would confirm. A source said that Alliance Capital, who was repped by CB Richard Ellis's New York co-chairman, Bob Alexander, paid roughly $50 per s/f for the space, a rate that would climb to the mid $50s per s/f after a set term. Murray Hill's Audrey Novoa was the landlord's in- house broker marketing the space.

135 West 50th Street, known as the former Sports Illustrated building within the city's brokerage community, had large blocks of vacancy that Sturner described as initially difficult to lease when he first purchased the building because past owners had given the property a bad reputation by not paying brokerage commissions and offering little in the way of tenant improvements.

"We couldn't get a broker to walk in at first," Sturner said.

But Murray Hill has executed a series of leases in recent months that have gone a long way towards erasing the building's vacancy.

Before the deal with Alliance Capital Management, the firm completed a renewal and expansion of the building's largest tenant, Time Inc., which increased its presence from roughly 140,000 s/f to 240,000 s/f. In other recent deals, NBC leased the entire ninth floor and the accounting firm, Weiser, who already occupied the entire 12th floor, took floors 13 and 14. A Puerto Rican government economic agency leased the building's top floor within the last month for rents around $70 per s/f, Sturner said. Only floors 15 through 21 remain vacant.

The sale of 135 West 50th Street didn't go through the kind of formal sales auction standard to most building trades in the city. Sturner, who has built a reputation for both buying and selling buildings in these kind of off-market deals, said that the exclusive sales agreement he entered into with UBS was a key factor in the bank's ability to acquire the building because sales prices in open auctions in the current frenzied real estate investment market often escalate faster than large institutional investors can get internal approvals to pay. "We were capable because it wasn't a beauty contest of sitting still," Sturner said.

Sturner has both purchased and sold a number of properties in off-market transactions, including his acquisition and disposition of 450 Lexington Avenue. Although some sales brokers say that open auctions yield the highest values, Sturner expressed his preference for exclusive off-market deals, even when he is the seller and it would be in his interest to achieve the highest sales price.

"When you have an open auction, you have to open your books and so the 12th floor knows what the 10th floor is doing," Sturner said. "The 8th floor finds out that he's paying more than the tenant on the 15th floor and he wonders why. Even though those leases might have gotten done at different times in the market when rents were either stronger or softer, people still will just focus on the numbers and it could cause problems."