A new obstacle on the way to completing the sale of a tower HSBC In New York? Today reported the owner of the office tower, a company Properties and buildingBecause the main tenant in the tower is expected not to extend the lease on the property, which expires in about three years.
According to Properties and building , She was told by a corporation from the HSBC Group, which leases about 63% of the tower space, that it has entered into a lease agreement for another property in Manhattan New York, and therefore will probably not extend the lease agreement for the tower, which expires on April 30, 2525. Properties and Building further stated that it is preparing to complete the transaction for the sale of the tower, on terms and as reported.
“However, if and to the extent that the said transaction is not completed, such non-extension of the lease may have an effect on the fair value of the tower presented in the Company’s financial statements.
About five months ago, Properties and Building entered into an agreement to sell the HSBC tower in Manhattan for $ 855 million, following a competitive process it conducted. The buyer in the transaction is Innovo Property Group.
At the time of signing the sale agreement, the clerk acquiring by Trustee, at the expense of the consideration, a hard (non-refundable) deposit of $ 30 million. Subsequently, the deposit was increased by $ 5 million due to the postponement of the completion date.
As of today, the planned completion date stands for the planned completion of the transaction to 16.5.22, i.e. in about two weeks. Properties and Building recently reported that it agreed to provide the purchaser with financing for the transaction in the form of providing Preferred Equity Investment to the purchaser in the amount of up to $ 50 million, with an internal rate of return (IRR) of 15% in the first year, and an increase of 0.5% every six months thereafter. ), On terms as agreed between the parties.
Prior to signing the sale agreement, Properties and Building presented the HSBC Tower in the library at a value of $ 864 million. Following the signing of the sale agreement, the company recorded a net loss of $ 35 million from the transaction in the 2021 summary reports, now updating that a further reduction is expected in case the transaction is not completed.
If the transaction is completed, the assets and building a net cash flow of approximately $ 330 million (approximately NIS 1.1 billion) are expected, after repayment of the bank loan on the property, as well as additional payments including taxes, costs, sales levies, and commission payment to Shimmel Brothers. On the other hand, properties and a building will invest about NIS 160 million in providing credit to the buyer, so in practice this is a cash flow of about NIS 900 million.
The sale of the tower is supposed to provide the properties and building with a substantial part of the cash flow required for the purchase of 37.2% of the company’s shares. Back-sea From Aaron Frenkel. The deal was signed a few months ago and Frenkel is expected to receive NIS 3 billion for his shares (NIS 465 has already been put in his favor by way of a deposit, and the balance of NIS 2.5 billion will be paid on completion).
The IPG acquirer was founded by Andrew Chang in 2015, and focuses on asset acquisition and management in the greater metropolitan area of New York, where its headquarters are also located. The question now arises whether the purchaser will complete the purchase transaction, or look for an escape route in light of the evacuation of most of the tower space in three years.
HSBC Tower was acquired by Properties and Building and Sister Koor from HSBC in April 2010 for $ 353 million. The transaction price then reflected the market situation following the global financial crisis and has since been considered one of the great successes of former controlling shareholder Nochi Dankner.
The relatively low price then reflected the collapse of New York office prices and the desire of large banks to get rid of real estate assets in order to improve their liquidity. A year and a half later, Properties and Building purchased Koor’s share in the tower at a value of about $ 480 million, due to the financial difficulties that Koor encountered.
The tower is located on Fifth Avenue in the heart ManhattanAdjacent to Beint Park and the New York Public Library and rises to a height of 30 floors in an area of about 80,000 square meters and occupies 99%. The northern part of the building, designated for preservation, was erected in 1901-1902.
In 2021 as a whole, the tower generated rental income of $ 75 million, with the average rent per square meter standing at $ 74 per month, i.e. $ 888,000 per square meter per year). However, the average rent per square foot in contracts signed during 2021 was higher and stood at $ 94 per month.