Times Square Parcel Deal Closes at $430M

NEW YORK CITY-A partnership led by New Valley has completed its $430-million acquisition of a Times Square development parcel at 701 Seventh Ave. The Times Square Gateway Center set to rise on the 0.4-acre site will eventually include hotel and retail components, as well as a 24,000-square-foot LED sign that reportedly will be the largest in the US.

“This property is unique because it will be one of the few new buildings—as opposed to a renovation of an existing building—in the Times Square submarket, which will allow us to customize the space for a variety of retail tenants,” says Steven C. Witkoff, chairman and CEO of the Witkoff Group, in a statement. Witkoff, whose firm is partnering with New Valley, Winthrop Realty Trust, Maefield Development and Infinity Urban Century on the $800-million project, adds that because of its “first-rate” location, the parcel offers “immediate opportunities to modernize the site’s signage and monetize its air rights.”

Located at the northeast end of the Times Square bowtie, the site currently is occupied by a pair of buildings that date from the early 20th century. One of them will be partly demolished to make way for the project’s retail and signage components, which are expected to be operational in two years, according to a release.

The closing on the development site is the culmination of a multi-year effort that began with Maefield’s negotiations with the various interest holders. Maefield and Infinity Urban Century secured exclusive control of the site this past January.

The joint venture will spend $170 million to develop the retail complex and another $200 million for a 500-key hotel tower, the release states. Starwood Property Trust and Starwood Capital Group, both based in Greenwich, CT, have co-originated $475 million in combined acquisition and construction financing for the development.

Starwood Property Trust says in a release that the loan will have an initial funding of $375 million, with $100 million of future funding for redevelopment costs; it also contains an equity participation right for the lender. Separately, Boston-based Winthrop says it has committed to investing up to $68 million on a preferred equity basis, with an initial contribution of about $29 million.

Advising Witkoff on the deal was Howard Michaels of the Carlton Group, who also brought in the Starwood financing and Winthrop participation, according to a release. In addition, Wallace Schwartz and Douglas Heitner of Kasowitz also represented Witkoff as well as New Valley, an investment unit of Vector Group Ltd.