Dermot Co., PGGM Acquire Lower Manhattan Tower
Located in New York City’s Financial District, the property will undergo upgrades.
The Dermot Co. and PGGM have acquired 20 Exchange Place, a multifamily property in New York City’s Financial District. The partners plan a value-add strategy for the apartment community, which was previously converted from office to residential.
Originally built as the headquarters of City Bank-Farmers Trust, the predecessor of Citigroup, 20 Exchange Place is a 767-unit, 57-story luxury multifamily structure. It was purchased from a partnership headed by DTH Capital in an off-market transaction.
Earlier conversion
“The building was fully converted in three phases over approximately a decade,” Andrew Levison, partner and chief operating office for The Dermot Company, told Multi-Housing News. “These office buildings often get converted in phases based upon the elevator banks. In the case of 20 Exchange, there are three banks servicing the low-rise, mid-rise and high-rise portions of the building.”
The building’s conversion started almost 20 years ago, before a boom in quality amenity spaces took place, according to Levison. “We saw an opportunity to reposition the property and become competitive with the newer buildings and more recent conversions.”
Dermot plans to improve the building’s amenities and unit finishes something the firm is “uniquely positioned to do based on our experience owning, renovating, and managing similar communities throughout the East Coast of the U.S., but particularly in New York City,” said Levison.
A number of distinctive and historic architectural finishes set the building apart. The ground-floor and cellar retail spaces are occupied by a theater tenant, Emursive. In addition to upgrading unit finishes and amenities, Dermot intends to offer building residents Dermot Ignite, a lifestyle and social program aiming to spur resident connection and engagement that will include access to curated events, wellness programs, networking opportunities and other exclusive benefits.
Cost basis
The cost basis for the other office-to-residential conversions currently taking place nearby is much higher than that of 20 Exchange. “As a result, we can provide a great living experience to residents at a lower cost,” Levison said.
Challenges confronting Dermot were few. “We assumed an in-place loan with a below-market interest rate, originally issued by Freddie Mac and subsequently syndicated, which required a lengthy approval process,” Levison said. “The loan servicers were very helpful in working with us to accomplish the loan assignment. There were no other significant obstacles, and the seller was a pleasure to work with.”
The building is located one block south of Wall Street. A few blocks away are major subway lines and the PATH train to New Jersey. Last week, developers netted $560 million for a New York City high-rise.
