The coronavirus pandemic has affected the whole world not just in terms of public health, but also in the economic aspect. Government-mandated lockdowns have forced most businesses to shut down temporarily and some have unfortunately shuttered permanently.
This has caused a multitude of negative effects like crashing sales figures, business disruptions, financial damages, job losses, and a whole lot of uncertainty.
This ambiguity has also affected how entrepreneurs and decision-makers are rethinking their fiscal decisions, especially with dealings that have so much money on the line. Real estate tycoon Aby Rosen is one of those have this dilemma. The crisis has seen the RFR Realty head honcho back away from some hefty real estate deals.
Rosen has decided to walk away from two deals that are worth more than $600 million combined. According to Business Insider, one of the two is the supposed acquisition of the retail condo located at 1600 Broadway in Times Square. Rosen’s RFR Realty was supposed to buy it for $200 million.
The other more pricey deal is the 900 Third Avenue building in Midtown that Paramount Group is selling for $400 million. Reports say that Rosen is looking into pushing through with the 900 Third Avenue deal after the pandemic.
The Foiled Acquisition
Rosen was set to purchase the 36-story office building from the real estate investment trust firm, Paramount Group, and was actually in late-stage talks with the Albert Behler-led company. Paramount Group, which is said to be worth $3 billion, reportedly considered granting Rosen a substantial loan to help finance the deal. However, that offer probably had to take a rain check with how the situation has turned out.
The 1980’s-era office tower located at the corner of East 54th Street, 900 Third Avenue, was bought by Paramount Group in 1999. They acquired it from JEMB Realty for a price tag of $164.8 million.
They bought out the 49-percent stake from their Australian partner, Investa Office Fund, for $172.7 million, consolidating the building’s ownership in 2012. The deal has the building valued at $352.5 million.
It has 600,000 square footage and has tenants that include merchant bank Carl Marks & Co., Littler, and Goldman Sachs. Although it’s said to be 80 percent leased, it’s important to note that one of the building’s largest tenants, the American arm of Japanese beauty company Shiseido, recently moved out and into a 226,000 square-foot space at 390 Madison Avenue.
Dubious Times in The Big Apple
Rosen’s recent decisions are reflections of the uncertainty currently plaguing the investment sales market in New York City as the public health crisis rocks the national and local economy. However, he is not the first developer to abandon major deals in recent weeks.
In March, Chetrit Group founder Joseph Chetrit canceled a deal worth $815 million to purchase the former Daily News building located at 220 East 42nd Street in Midtown. He was supposed to acquire it from SL Green, but Chetrit’s lender, Deutsche Bank, dropped out.