Starwood Trades 1372 Broadway to Ross Stores' Affiliate

NEW YORK CITY—Starwood Capital Group reports today it has sold the leasehold interest in the 1372 Broadway office building here to an affiliate of Ross Stores, Inc. of Dublin, CA.

The 21-story, 572,000-square-foot building serves as the East Coast buying office for Ross Stores, which is an off-price retailer of apparel, accessories, footwear and home fashions.

While Greenwich, CT-based Starwood Capital did not disclose the terms of the transaction, Ross Stores announced today that it would primarily use the proceeds of a $250-million offering of senior notes for the purchase of a New York City office building, Globest.com has learned. The senior notes due in 2024 will be issued at a price of 99.329% of their principal amount and will bear interest at a rate of 3.375% per annum, Ross Stores states.

The 21-story, 572,000 square-foot building is situated between Times Square and Herald Square on the northeast corner of West 37th Street and Broadway. Starwood Capital Group, through its Starwood Distressed Opportunity Fund IX, purchased the leasehold interest in the property in June 2012. Herald Square Properties partnered with Starwood Capital Group on the investment, and functioned as 1372 Broadway's asset manager and exclusive leasing agent.

"In making this acquisition, we anticipated that office demand would shift from Midtown Manhattan to the market below 42nd Street, where this property is located," says Marcos Alvarado, senior vice president at Starwood Capital Group. "We are pleased that our investment thesis played out as expected."

Kasowitz, Benson, Torres & Friedman LLP advised Starwood Capital Group on the sale of 1372 Broadway.

Ross Stores' senior note offering is projected to settle on Sept. 18, subject to customary closing conditions, the company states. Merrill Lynch, Pierce, Fenner & Smith Inc., Wells Fargo Securities, LLC and J.P. Morgan Securities LLC are acting as joint book-running managers for the offering.