Tuesday, Jul 10, 2012


 
   By Eliot Brown

New York real-estate firm RXR Realty LLC has agreed to buy a Manhattan office building owned by Dubai-based Istithmar World Capital, according to multiple people with knowledge of the terms of the deal.

The price for the 40-story tower at 450 Lexington Avenue couldn't be determined. But the building is worth more than the $600 million that Istithmar paid for it in 2006, the people said.

RXR, led by Long Island landlord Scott Rechler, has been a highly active buyer in the Manhattan office scene during the market recovery. The company has taken control of several office properties struggling with high debt loads during the downturn, including 340 Madison Avenue and 1166 Sixth Avenue.

In the case of 450 Lexington, RXR maneuvered itself into a position to make a bid on the property by purchasing nearly half of the building's $600 million in debt, people said. The debt was slated to mature this week in the midst of a tough refinancing climate. That gave RXR an inside track to negotiating a deal with Istithmar, the people said.

Mr. Rechler, also the vice chairman of the Port Authority of New York and New Jersey and an ally of New York Gov. Andrew Cuomo, led the investment groups that bought into two of the largest buildings that traded hands in 2011. The firm and its partners bought the massive Starrett Lehigh Building in Chelsea for about $920 million last summer, and they bought a majority stake in 620 Avenue of the Americas in a deal that valued the 115-year-old building around $500 million.

Istithmar, the private-equity arm of Dubai World, was a major player in the Manhattan real-estate market during the boom, investing in an array of high-profile properties including the Mandarin Oriental hotel in the Time Warner Center and the W Hotel in Union Square.

After Dubai's financial crisis erupted in 2009, the company ran into trouble on many of those investments, surrendering to lenders the Union Square W, for instance.

Istithmar bought 450 Lexington, which has more than 900,000 square feet, in 2006 and then refinanced the property in 2007 by taking out $600 million in debt. The building is nearly fully occupied with tenants including the law firm Davis Polk & Wardwell.

Write to Eliot Brown at eliot.brown@wsj.com

(END) Dow Jones Newswires

10-07-12 2254GMT