- Empire State Realty Trust is marketing 501 Seventh Avenue, a 500,000-square-foot Manhattan office building that is 84% leased, with Newmark seeking roughly $150 million.
- ESRT has put $54 million into the building, 40% of it in the last five years, on systems, windows, elevators and a rooftop lounge.
- The listing follows a $218 million sale of 1359 Broadway last week and a $280 million sale of 250 West 57th Street earlier this year, as the REIT works to pay down debt and buy back shares.
Empire State Realty Trust is marketing 501 Seventh Avenue in Manhattan for about $150 million, GlobeSt reports, the latest step in the REIT’s effort to strengthen its balance sheet.
Newmark’s offering memo describes a renovated, amenity-rich building that needs little additional capital, as The Real Deal reported.
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The Details
Newmark’s Adam Spies and Josh King are running the sale. ESRT has spent $54 million on the 500,000-square-foot property, 40% of it in the past five years.
The upgrades cover core systems, new windows, elevators and a rooftop lounge.
The Real Deal puts the building at 84% leased, with fashion tenants such as PVH Corp., Steven Madden and Carolina Herrera. A $150 million price works out to roughly $300 per square foot.
Another Manhattan Exit
It comes a week after ESRT sold 1359 Broadway for $218 million. Earlier this year the REIT also sold 250 West 57th Street at a $280 million price.
Proceeds are earmarked for debt reduction and share repurchases, according to The Real Deal. President Christina Chiu said on the third-quarter earnings call that ESRT has sold out of the suburbs and now looks at Manhattan assets where it has executed its business plan.
Leasing Is Improving
The sales come as leasing gains traction. ESRT’s office occupancy rose to 91.9% from 89.1% in the second quarter, we reported earlier this week, even as a weak observatory pulled funds from operations down to $51.7 million from $59.3 million a year earlier.
ESRT reported 92.3% occupancy across its commercial portfolio as of Sept. 30.
Why It Matters
The sales also land under investor pressure. Activist Erez Asset Management disclosed a 5.8% stake in October, bought for about $43 million, and asked management about capital allocation and a possible strategy review, as we covered.
Selling mature Manhattan offices to fund buybacks and debt paydown is one way to answer that pressure, and each sale gives the market a fresh price point for midtown office assets.
What’s Next
Chiu said ESRT will keep being active on sales, so more listings are plausible. Whether buyers pay about $300 per square foot for an 84%-leased Garment District building will show how deep demand runs for renovated office space.
