Broadway Real Estate Partners cashing out of Long Island market

Long Island Business News, Jul 22, 2005 by Dawn Wotapka Hardesty

Broadway Real Estate Partners LLC is ending its Long Island run.

The Manhattan-based real estate investment and management firm, along with equity partner Investcorp International Inc., is cashing in on a sizzling seller's market and shedding its duo of well-known office buildings, Three Huntingdon Quadrangle in Melville and 1979 Marcus Ave. in Lake Success, to separate buyers.

Three Huntington Quadrangle is the region's fifth-largest, according to American Commercial Real Estate's database.

At a total of about $135 million, the two buildings amount to relatively big deals for Long Island, says Andrew J. Merin, executive vice president of Cushman & Wakefield's Metropolitan Area Capital Markets Group, who helped negotiate the deals.

But the sales hardly mean Broadway has been unhappy on the Island. They made a great return on their investment, he explains. That's a lot of money ... They are not long-term holders, per se. They're taking advantage of the great capital markets right now and redeploying their dollars.

In the transactions:

Three Huntington Quadrangle, 401,600 square feet, went for about $84 million to AEW Capital Management in Boston.

1979 Marcus Ave., 348,800 square feet, is set to sell in the mid- $50 million range sometime this week to a partnership between the Lincoln Equities Group and the Willet Cos., an Irish-backed property investment outfit.

Since its debut in 1971, 3HQ has had several owners. Broadway Partners acquired it in late 2001 for $56 million. Investcorp joined Broadway Partners as an equity partner in both properties last year.

Apparently what attracted AEW Capital to the Melville landmark was its long-term stability, says Robert Seidenberg of CB Richard Ellis, who has been the leasing agent for several years and served as an adviser to Broadway Partners.

The class A-minus site has a 97 percent occupancy rate. Major tenants include Empire Blue Cross Blue Shield and Sovereign Bank. That roster is as good as any building on Long Island in Seidenberg's view.

So is the mix at Broadway Partners' other Island building, 1979 Marcus, which is more than 90 percent leased. The 17-year-old Nassau site houses North Shore-Long Island Jewish Health System's purchasing offices and the system's Center for Learning and Innovation, from which its work force (the largest on the Island) can take career development courses. Another prominent tenant is OneBeacon Insurance.

A completed deal would mean Broadway Partners' original $39 million investment - made four years ago - had appreciated some 40 percent.

One of the buyers, Rye-based Willett Cos. is a Long Island newcomer that maintains a low profile, says CEO Frank Kenny.

In the last few months, Willett has been on an office shopping spree in Greenwich, Conn., where in June, it paid $87.5 million for the 119,344-square-foot headquarters of Unilever Home and Personal Care.

We're having a growth spurt, Kenny says with a laugh. We're eating our Wheaties.

Broadway Partners, meanwhile, may be shedding its Long Island portfolio, but don't rule out a second act.

I would fully expect them to acquire more properties on Long Island in the future, says leasing agent Seidenberg.