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Sotheby’s has repurchased its worldwide headquarters from an RFR Holding Corp. affiliate for $370 million

February 25, 2009

By: Joel Spolsky

Sotheby’s has repurchased its worldwide headquarters from an RFR Holding Corp. affiliate for $370 million.

Approximately 600 employees are based at the building, located at 1334 York Ave. The company, which engages in art auction, private sales and art-related financing activities, had sold the 72nd Street building to RFR, a partnership of Aby Rosen and Michael Fuchs, in February 2003 for $175 million; it was in the middle of a 20-year leaseback.

A Stroock & Stroock & Lavan team represented the buyer and included real estate partners Leonard Boxer, Peter G. Koffler and associate Marisa Bocci, tax partner Mayer Greenberg, and litigation partners Charles Moerdler, Curtis Mechling and associate Ronnie Brandes.

A Fried, Frank, Harris, Shriver & Jacobson team represented the seller and included real estate partner Jonathan Mechanic and associates Avi Feinberg, Rachel Slutsky and Michael Werner and tax partner Richard Wolfe.

Originally built in 1921 as a cigar factory, the property stands at 10 stories and contains 467,558 square feet. In 1999, Sotheby’s purchased the building; it completed a sixstory, $150 million expansion one year later. The building hosted the $21.3 million sale of a rare 710-year-old copy of the Magna Carta in 2007.

William Ruprecht, president and chief executive officer of Sotheby’s described the building in a news release as “the premier auction facility in the world, and integral” to the company’s business.

“The building is a strategic asset to this organization and we are extremely excited to be able to own it once again,” he added.

Sotheby’s has paid $135 million in cash and will assume the seller’s mortgage of $235 million. With the transaction, Sotheby’s has eliminated a capital lease obligation on the York Avenue property which had a 10.4 percent rate and replaced it with a mortgage obligation at a rate of 5.6 percent.

According to published reports, that will result in annual cash interest expense savings of approximately $4 million in 2009.

TenantWise chief executive officer M. Myers Mermel and partner Caroline McLain served as the brokers for Sotheby’s.

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

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