Penncom Plaza Building sold for $91m.

Tribeca Associates together with its investment partner, Ritchie Capital Management, has sold Penncom Plaza office building for $91 million. The announcement was madeby Bill Brodsky and Elliott Ingerman, principals of Tribeca Associates.

The property, located just steps from Pennsylvania Station at 132 West 31st Street, was sold to joint venture real estate partnership, C&K Properties and Zamir Equities.

Richard Baxter, Ron Cohen and Heather Brownfeld, of Cushman & Wakefield arranged the transaction. Ackman-Ziff arranged financing from Wachovia Bank.

Tribeca acquired the building last December for $63 million from a joint venture between Blackacre Capital Management and Taconic Investment Partners. At that time, Tribeca's strategy was to hold the asset for the long-term.

Mr. Brodsky said, "Penncom Plaza is an excellent asset and our corporate philosophy is to work diligently and steadily to improve the value of any property we acquire. However, Penncom Plaza's dramatic appreciation in value made this transaction too compelling. We are fortunate that an asset of this quality commands the type of leverage necessary to make this value achievable."

Formed in 2001, Tribeca Associates has purchased and sold more almost $300 million worth of commercial real estate throughout the Northeast U.S. Tribeca Associates is now pursuing a growth oriented strategy in New York, and plans to create added value across a broad portfolio of assets targeted for redevelopment and improved management.

Bradley Settleman, Managing Director of Ritchie Capital Management, said, "We are pleased with the sale of Penncom Plaza. With the continued strong demand for solid NYC real estate, we thought it was the appropriate time to sell this property and lock in significant profits for our investors."

The new owners report that the building was acquired at a capitalization rate of just slightly less than eight percent, which is considered a very strong rate of return in a market often said to be awash in investor capital.

"This is a high-value acquisition of a fully occupied office building that has stable cash flow, long-term leases with creditworthy tenants, and the opportunity to further enhance its position in a thriving and vital Manhattan submarket," says Ben Korman, a principal of C&K Properties. He also notes that the building has benefited from substantial improvements made by a prior owner.

Joshua R. Zamir, a principal of Zamir Equities, observes also that the building's 26,000-square-foot floor plates "are unusually large for a Class-B office structure. This uniqueness provides a distinct advantage over office properties competing in its class."

Mitchell A. Arkin of Cushman & Wakefield, who will oversee the property with C&W colleague John Picco, says insurance company HIP, a major tenant in the building whose lease extends until 2011, will be seeking to sublease its space as part of HIP's consolidation of its offices downtown.

"This opens up a terrific opportunity for a new deal that could work to the benefit of everyone involved, either through a sublease or a new primary lease," says Mr. Arkin. "The large floor plates offer a substantial amount of contiguous space and flexible configuration possibilities."

C&K Properties, co-founded by Mr. Korman and co-principal Meir Cohen, owns more than 2.5 million square feet of commercial property in the New York area.

Zamir Equities operates an active real estate business with ownership interests in several properties in New York and Israel, totaling more than three million square feet. The firm recently acquired two notable financial district towers, 44 Wall Street and 80 Broad Street, both in joint ventures with Swig Burris.

It also is in contract to acquire downtown's 5 Hanover Square. In addition, Zamir recently purchased 587 Fifth Avenue, where the firm maintains its corporate offices. Since January 2004, Zamir Equities total acquisitions have exceeded 1.7 million square feet.

Zamir Equities' first generation principal, Asher R. Zamir, says: "It was a pleasure working with C&K Properties on this deal and we hope to do many more great things together."

The Penncomm Building was opened in 1925 and subsequently played an important role in Manhattan's furrier district. In recent years it has housed tenants in a diverse range of industries, such as health insurance, printing and social services.

Located just one-half block from Madison Square Garden, Penn Station and the Herald Square PATH station, Penncom Plaza is a fully modernized, 18-story, 420,000 s/f property. The building, which was built in 1925, was formerly known as the Greeley Arcade Building. It is distinguished by its elegant, through-block main lobby that connects 31st and 30th Streets. Penncom Plaza has windows on all four sides. The property is well set off from the low-rise buildings around it, offering superb views and an unusual amount of light and air for a mid-block building in Manhattan.

Penncom Plaza is 100% occupied by a roster of high-quality tenants.