Terminate-recapture lease deal

Real Estate Weekly, June 23, 2004

National commercial real estate services firm Studley recently arranged for NLI International, Inc., a subsidiary of Tokyo-based insurance conglomerate Nippon Life Insurance Company to reduce real estate overhead costs and yet remain at the same Manhattan address.

Through a complex series of strategic negotiations, Studley arranged for NLI to terminate an existing 28,372-square-foot lease at 1251 Avenue of the Americas and immediately commence a 15,412-square-foot sublease elsewhere in the building.

"NLI was a very challenging terminate-recapture assignment, said Kunihiko "Key" Otomo, Managing Director with Studley. "NLI found itself saddled with a long-term lease for forty percent more space than it needed at above market rent. In order to enable our client to terminate its lease, we located an existing tenant in the building, Moore Capital Management, LLC, that needed to expand and wanted the entire 52nd floor that NLI occupied."

"Adding to the complexity of the assignment was that NLI's senior management both in Tokyo and in New York desired to stay at 1251 Avenue of the Americas," said Michael L. Goldman, Executive Managing Director with Studley who co-represented NLI with Mr. Otomo. "So, Studley researched subleasing opportunities and was able to terminate the existing lease, provide the landlord with a current tenant willing to expand into NLI's space and then executed a sublease at well below market rent all at the same address. It was a win-win situation for all parties."

NLI now has a 15,412-square-foot sublease from Federal Insurance Company (owner of the Chubb Group), which was represented by Cushman & Wakefield. Newmark represented Moore Capital Management, LLC. The landlord, Mitsui Fudosan, was represented by Newmark.