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GlobeSt.com: Garment Center Office Trades for $29M

11/17/2009

NEW YORK CITY-A 12-story Garment Center office building has traded in an all-cash $29.5-million deal to a joint venture between two local entrepreneurs whose identities were not disclosed, Savanna Investment Management announced Friday. In a release, Savanna says it realized a profit on its investment in the 144,000-square-foot 63-67 W. 38th St., which it initially made 18 months ago.

Marty and Eric Meyer, a father-and-son team at FirstService Williams, represented Savanna on the deal. The Meyers were selected to market this property based on their experience in selling similar assets in the Garment Center.

Savanna and a hedge fund partner initially invested in the property by originating a senior loan 18 months ago to the prior owners, the release states. Savanna subsequently bought out its hedge fund partner and then negotiated a deed in lieu of foreclosure with their borrower. Once Savanna owned the asset outright, the company then embarked on a two-pronged business plan of repositioning the building and launching an "aggressive" marketing program to sell it, the release states.

Savanna principal Kevin Chisholm says in the release that the strategy enabled his company "to turn a profit despite the horrific real estate market." Nick Bienstock, managing partner at Savanna, calls the sale "a testament to the resilience of the New York City real estate market. Despite the dearth of financing for value-added projects, we received substantial interest for this asset." He adds that this demonstrates that "even in today’s severely constrained capital markets environment, there is liquidity for well-located, properly-priced, New York City real estate."

Built in 1930 as a commercial loft building, 63-67 W. 38th is zoned for commercial and residential uses. It is situated on a thru-block parcel on the north side of West 38th Street that connects to the south side of West 39th Street, Currently it is 15% occupied with one remaining tenant.

Copyright © 2009 Incisive Media US Properties, LLC. All rights reserved.

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Savanna is a real estate investment and development firm that focuses on opportunistic investment strategies targeting superior risk-adjusted returns on behalf of its institutional investors.

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Savanna employs opportunistic strategies to invest in middle market real estate assets of the primary asset types including office, retail, residential, and industrial.

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Savanna's team has a broad base of experience and expertise in valuation, financial analysis, deal sourcing and structuring, property acquisition and disposition strategy, design, development, redevelopment, asset management, accounting, and leasing.

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Savanna has invested on behalf of, and in partnership with, many of the premier institutional real estate private equity funds, REITS, and hedge funds active in the United States.