The scions of Anglo-Iranian rug merchants have emerged as among the most prominent buyers of mid-market Manhattan office buildings, finding heftily discounted assets through an intriguing and increasingly fruitful channel: deals where the lender is calling the shots.

Sovereign Partners, the shop run by the Brothers Sakhai (Cyrus & Darius), is finalizing a deal to acquire 2 Grand Central Tower, according to multiple sources familiar with the matter. The pricing is coming in at around $400/ 🦶, right at the loan basis that owner Rockwood Capital scored this summer. Which makes sense, because the party largely calling the shots here is lender MetLife 👇

On Wednesday, Promote Insiders got the scoop on which Chinese investors are still writing equity checks in US CRE. Good timing, b/c the same day it dropped news broke that billionaire Zhang Xin is stepping into the ground-up game w/ a condo project at a former distressed HFZ joint. If this sounds like your jam, you can sign up for premium on a 2 week free trial and read it here.

To sweeten the deal, MetLife offered buyers v competitive financing, per insiders – think a 60-65% LTV in the low/mid 6% range. This is NOT the end state, mind you – a contract is yet to be signed, and terms may v well change during the negotiations. (Promote readers are getting this while it’s still in the oven, so the shape of the pie may change - or the pie may even fall apart.)

Eastdil’s Gary Phillips & Will Silverman have the listing for the 44-story, 670K sf tower at 140 East 45th St. , which MetLife encouraged Rockwood to shop this summer, even as it provided a $263M refi for the building – this financing replaced a prev $260M loan issued by MetLife in ‘18, and is best interpreted as a band-aid while MetLife and Rockwood found someone to take the asset. One source familiar w/ the building said the in-place NOI was in the mid-$16M range, which would put the Sakhai deal at around a low-6 cap, but we couldn’t confirm this.

The building has a colorful - if Harry Macklowe high-gloss white counts – history. Macklowe built it in ‘81 and in ‘08 sold it to BXP (the artist fka Boston Properties) and the Emiratis. Rockwood bought it post GFC for $401M and hoped to cash out for $580M ($870/ 🦶 )in Feb ‘20 - but then came a lil’ something called Covid-19.

The Sakhais have applied this playbook before. In ‘23, when lender Blackstone pressured Pearlmark Real Estate to dispose of the Plaza District’s Tower 56 in order to recover its debt, in stepped the Sakhais for ≈ $110M ($580 / 🦶 ), or right abt the amt. of O/S debt. That was just the start of a deal frenzy - a few months later, they struck a deal to buy Clarion Partners’ 100-104 Fifth Ave for $125M ($450/ 🦶 ), a big 💇 from the $800/ 🦶 Clarion had paid a decade prior. And in June ‘24, they agreed to pay $178M ($350 / 🦶) for Nuveen’s 780 Third Ave.

The Sakhai family parlayed wealth from a Transatlantic rug business (in Manhattan, they owned Cyrus Carpets, at 32nd/Fifth) into a significant US CRE portfolio, some of it acquired during the S&L crisis. In the mid 90s, the NYT reported that the family, which moved stateside in the 80s, was working on a revamp of the Lord & Taylor building. They’re part of a wave of Men With Deep Pockets ™ that have found this such a compelling era in the NYC market.

For brokerages, working on lender-driven sales is becoming an increasingly lucrative line of business - Eastdil, for e.g., brokered the sale of 470 PAS to Williams Equities earlier this year as well as the 780 Third deal to the Sakhais; on both deals, MetLife was the lender, records show, and per sources drove the sales. While the NYC office market (single-malt buildings excepted, those are ripping) finds its new equilibrium, this is the route many trades will take.

Why would a lender go down this route? In a nutshell: Foreclosures are messy, lengthy, and have both headline & execution risk. Deeds-in-lieu are more palatable, but even that puts the bank in the unwanted position of running the brick for a time. This method – working w/ the sponsor to unload the distressed/underwater asset while offering below-market financing to a buyer – can raise purchase prices (since cheaper debt juices the buyer’s IRR and allows them to bid higher) and potentially avoids the lender realizing an immediate loss on their books. The higher PP allows for greater payoff of the existing loan, and the lender gets to roll the dice that the new buyer – hopefully operating under better market conditions – will have more luck w/ the asset.

There are two Blackstone cubs the market’s been watching closely ever since they left the den. There’s Tyler Henritze, who raised funds for his Town Lane in record time last year and has been gobbling up industrial & office assets. And then there’s Chad Pike, who co-ran the real estate group and co-founded BX’s Tac Opps team before leaving the firm in ‘20 and setting up his own vehicle, Makarora, in late ‘23. Now, backed by money from Ares, Pike has made a blockbuster deal, agreeing to pay $2.1B to buy Plymouth Industrial REIT. Makarora/Ares agreed to pay $22/share in an all-cash deal, a 50%+ premium to Plymouth’s share price on Aug. 18 - the day before news broke that AUM gobbler ™ Sixth Street had made an acquisition offer. Plymouth has 200+ industrial properties, and its board has approved the deal.

The thing we’ve always marveled about guys like Pike – more than smarts or anything else – is time management. How does someone w/ one of those massive BX jobs also find time to seriously fly fish and side hustle an experiential travel co? Make it make sense 🐡

Jeff Levine’s Douglaston Development has won one of the most hotly contested NYC RFPs, The Promote has learned: the bid to redevelop the site of the Gansevoort Meat Market, where the city wants to see hundreds of affordable units added.