MELVILLE,NY-Reckson Associates Realty Corp. sold a 49% stake in the 1.4 million-sf building at 919 Third Ave. to the New York State Teachers’ Retirement System for roughly $221 million. Reckson bought the property just over a year ago for $278 million.

NYSTRS was advised by JPMorgan Fleming Asset Management in the transaction and acquired the joint venture interest based on a property valuation of $450 million. Reckson received about $98 million of net cash proceeds from the sale.

The deal is part of Reckson’s ongoing capital recycling program, which raked in $342 million for the firm this year. The latest sale conforms to the company’s strategy of purchasing, redeveloping and selling distressed assets in core markets.

Reckson co-chief executive officer Scott Rechler says of the sale, “We initially created value at 919 third Ave. by opportunistically acquiring the first mortgage note, then by obtaining title and repositioning the property and now by successfully accessing the market which exists for joint venture equity partners.”

Reckson bought the class A building in November 2000 for roughly $200 per sf. An $87 million building improvement program was completed on the property. Recently, the company took out a $250 million first mortgage on the property. Reckson will continue to be the majority owner of the property and will handle management and leasing duties.

While the building’s current valuation of roughly $321 per sf is considered modest for Midtown, Reckson managing director Philip Waterman III has said in published reports that the low price reflects lease incentives and free-rent deals currently in place and are not a post-Sept. 11 phenomenon.

Reckson is a self-administered and self-managed REIT specializing in the acquisition, leasing, financing, management and development of office and industrial properties.

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