Late last February, as the pandemic began to take hold of New York City, CBRE’s top investment sales broker team Darcy Stacom and Bill Shanahan closed on a $900 million sale of the 40-story office building at 330 Madison Avenue.
The transaction was celebrated Wednesday with the Henry Hart Rice Achievement Award, the highest prize in the Real Estate Board of New York’s 77th annual Most Ingenious Deal of the Year competition.
“In my decades of brokerage, I have rarely seen such skillful handling of such a weak hand,” said Woody Heller, co-host of the virtual award ceremony, as he introduced the top prize winner.
As he explained to the Zoom audience, the CBRE team was initially hired for a much simpler assignment: selling Abu Dhabi Investment Authority’s 75 percent stake in the building to its minority partner, Vornado Realty Trust. ADIA had exercised an irreversible buy/sell agreement, thinking Vornado would buy.
The assignment took an unexpected turn when Vornado said it wanted to shed its 25 percent stake instead.
Abu Dhabi’s sovereign wealth fund ended up paying just over $1,000 per square foot for Vornado’s stake in the Midtown East building. The mid-2019 deal valued the 846,000-square-foot building between East 42nd and East 43rd streets at $900 million, which came to be considered an above-market price, according to Heller.
Suddenly, the CBRE team’s task for the wealth fund was selling a 100 percent stake — as the building’s occupancy was falling.
But “through a series of ingenious and not obvious maneuvers, the winning brokers managed to quickly improve occupancy, reposition the marketplace’s perception of the building, secure desirable financing and an attractive buyer,” said Heller. That buyer was MEAG, a subsidiary of German reinsurance giant Munich RE.
A Munich Re spokesperson told The Real Deal that the firm is “very much committed to its investment and sees [330 Madison] as a long-term investment.”
More ingenious deals
The competition’s second prize, the Robert T. Lawrence Memorial Award, also went to CBRE.
In December 2018, the firm’s leasing brokerage team of Sacha Zarba, Jeffrey Fischer and Alice Fair started working with TikTok to find a home in New York City. Because the video-sharing company was rapidly growing, a search for 30,000 square feet finally materialized as the celebrated 232,000-square-foot lease signed in May at the Durst Organization’s One Five One, formerly known as Four Times Square.
It was the first six-figure office deal since the onset of the pandemic and was the leasing equivalent of a defibrillator for a city office sector in shock over Covid and work-from-home.
Third prize, the Edward S. Gordon Memorial Award, went to Savills’ Ira Schuman and Richard Eaddy, who advised the National Urban League on its 17-story, mixed-use development, to be called the Urban League Empowerment Center at 121 West 125th Street in Harlem.
The discussion started as the lease for the civil-rights nonprofit’s headquarters in Wall Street was nearing expiration. The Savills team suggested the group own or sign a long-term ground lease for its next headquarters to take advantage of its exemption from property taxes.
The team found a publicly owned parking garage in Harlem and helped persuade the city and state to put it up for competitive bidding. The Urban League ultimately secured a 99-year ground lease. Its new headquarters building will also include affordable housing, retail space and a museum dedicated to the civil rights movement.