650 Madison Sale Confirms Trophy Strength

NEW YORK CITY-According to multiple sources, Ashkenazy Acquisition Corp. has agreed to pay $695 million to Hiro Real Estate Co. for 650 Madison, the 27-story 600,000-sf office trophy at that address. The price translates to $1,185 per sf, the highest price for a Manhattan trophy this year, but as much as $148 per sf, or a total of $105 million less than the estimated selling price at the end of 2007.

A call to Ashkenazy was not returned by deadline and a call of Hiro was directed to the office of John Kenyon at JP Morgan, who heads the team recruited by Hiro to market the property. A spokeswoman for JP Morgan tells GlobeSt.com, “the property is not sold, but it is under contract.” She declined to disclose the price or buyer.

The drop in price from year-end 2007 to the start of this year caused speculation in some quarters that the credit crunch is depressing the value of trophy Manhattan office properties. Not so, says Deborah Jackson, executive managing director of locally based Weiser Realty Advisors. “No one deal makes a market, even though the price on that deal declined.”

On condition of anonymity, one local office broker tells GlobeSt.com that Hiro was eager to close quickly and also confirms that Ashkenazy is looking for financing. Jackson tells GlobeSt.com that money is still available, especially for well-located, well-leased properties. This asset, a block from Macklowe Properties’ GM Building, which is also up for sale, certainly fits that profile.

While money is available, Jackson notes, “loan-to-value ratios have widened. You can’t easily fully finance an asset, and deals take a little bit longer.” While loan to value ratios still vary widely, she says, “they are now in the more traditional range, which, on average is about 70%.”