Macklowe kicks off EOP sell-off with $7B purchase.

The anticipated sell-off of the EOP portfolio got underway as soon as the ink was dry on the REIT's record-breaking $39 billion purchase by Blackstone last week, and New York developer, Harry Macklowe, was first off the mark.

Macklowe Properties paid $7 billion for all but one of EOP's prized Manhattan towers. The Class A portfolio Macklowe purchased includes 717 Fifth Avenue, Worldwide Plaza, 1301 Avenue of the Americas, Park Avenue Tower, 527 Madison Avenue, 1540 Broadway, 850 Third Avenue and Tower 56.

Together, the buildings comprise approximately 6.5 million square feet of prime office space in a market where investor appetite for trophy assets has led to a flurry of billion dollar sales and a seemingly endless demand for product.

Harry Macklowe, chairman of Macklowe Properties said the properties provided a "synergistic compliment" to his existing portfolio and the purchase was consistent with his long term objectives.

William Macklowe, president of the company, added, "The addition of these assets to our current holdings will allow us to expand our brand and core strategy of creating long term asset value."

Financing was provided by Deutsche Bank and Fortress Investment Group, as arranged by Robert Horowitz of Cooper Horowitz. Roy March of Eastdil Secured represented EOP.

The sale leaves Blackstone with just one EOP Class A tower in the city, the former Verizon Building at 1095 Avenue of the Americas.

In 2005, EOP paid Verizon $505 million for an 80% share of the building and then set about spending another $200 million on a gut-rehab some speculated might never pay off.

However, the firm was successful in leasing over half the 1.3 million square feet tower to MetLife and the law firm, Dechert LLLP. With space at a premium in midtown, brokers don't anticipate any glich in leasing the remaining 400,000 s/f before the building's scheduled occupancy in the summer of 2008.

While there has been speculation that Blackstone plans to hold the tower until the rehab and leasing campaign--being handled by CB Richard Ellis--are complete and the anticipated inflated rents serve to swell the sale price of the building as a single asset even further, the 20% ownership Verizon retained in the building may be a reason there has not been an immediate sale.

A spokesman for Verizon was unable to comment on the future plans for the building in which the communications giant still operates vital switching stations occupying roughly 200,000 square feet, a facility vital to the midtown communication network.

Elsewhere, it was reported that Blackstone was selling off the rest of the 105 million square feet EOP portfolio in sizable chunks. The Boston Globe reported that locally-based Beacon Capital had agreed to pay $6.5 billion for the Washington DC and Seattle portfolios while it was expected the firm would hold onto the 12 million square feet of Boston properties.