Whitehall team set to market 14 Wall Street

Real Estate Alert,  May 12, 2004  

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A partnership led by Whitehall Street Real Estate Fund is preparing to market the 1 million-square-foot office building at 14 Wall Street in Lower Manhattan. The 37-story tower is 91% occupied, but is likely to be marketed as a value-added play. The reason: A 300,000-sf lease to Deutsche Bank that expires in December is unlikely to be renewed. That might make the offering attractive to an owner-occupier or to a developer interested in converting part of the building for residential use.

Because of the various potential strategies by a buyer, pricing could vary widely. Brokers familiar with the property suggest it could fetch $160-$185/sf, or $167 million to $193 million.

The vault-like granite structure, which was erected in 1912, sits across the street from the New York Stock Exchange. In the building's early days, financier J.P. Morgan had an apartment on the top floor, which now houses a restaurant. The property, at the corner of Nassau Street, was expanded in 1932 and substantially renovated in 1993. It was formerly known as the Bankers Trust Building, after its main tenant. Deutsche assumed the lease through its acquisition of Bankers Trust in 1999. The property was declared a historical landmark in 1997.

Asking rents range up to $31/sf, plus electricity costs. In addition to Deutsche, which subleases a portion of its space, tenants include the New York Stock Exchange, Cigna, Fleet Securities, Morgan Stanley, Citigroup, Credit Suisse First Boston, Time Warner Telecom and Skidmore Owings. Several tenants, including the stock exchange and May Davis Group, leased or subleased space in the building after the Sept. 11 terrorist attacks.

Whitehall, which is operated by Goldman Sachs, owns 14 Wall in partnership with local investor Larry Gluck and hedge-fund operator Dickstein Partners. The partnership bought the building in 1999 from GE Investments for $106.5 million, or $102/sf. A year later, it unsuccessfully shopped the property via Goldman. That fall, Gluck, who heads Stellar Management, tried to buy out Whitehall's stake, but the plan was ultimately nixed. It's not known whether Gluck might try that strategy again.

The Whitehall team evidently did not seek marketing proposals from brokerages. Instead it awarded the listing directly to Eastdil Realty's Douglas Harmon, who handled the yearend 2002 sale of Whitehall's 71% stake in the office building at 1185 Avenue of the Americas in Midtown Manhattan.

Marketing is expected to begin later this month.

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