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American Realty Capital New York City REIT to Purchase Property in Times Square

New York-centric, non-traded REIT of the Schorsch empire, American Realty Capital New York City REIT (NYCR), revealed today that it has entered into a purchase and sale agreement to acquire 570 Seventh Avenue in Times Square, Manhattan.

The institutional-quality office building will be purchased for approximately $170.3 million, exclusive of closing costs. NYCR has made a $17.0 million non-refundable deposit and intends to fund the purchase with proceeds from its ongoing initial public offering.

With approximately 170,000 rentable square feet, the property is currently 56% leased. Its largest tenants are NY Loves Us, Inc. and Klestadt & Winters, LLP, each representing approximately 16% and 8% of annualized cash base rent, respectively. NY Loves Us’ annualized cash base rent is $624,000 while Klestadt & Winters’ is $301,600.

A condition to closing has NYCR entering into a one-year lease with the seller for approximately 33,000 rentable square feet, which is expected to increase the property’s occupancy to approximately 76%.

“We are pleased to be purchasing 570 Seventh Avenue, located at the desirable southern edge of the Times Square Bowtie,” commented Michael A. Happel, President of NYCR. He continued, “We see a very significant opportunity to add value to this property through re-tenanting the building at market rates. Moreover, we expect to renovate the lobby, reposition the retail, upgrade the office and maximize the value of the new digital signage. We are very bullish on the Times Square submarket and particularly this asset.”

NYRC’s focus is to construct a portfolio comprised mostly of office properties throughout New York City with an emphasis on Manhattan. With a maximum offering of $750 million, as of July 31, 2014, the REIT had raised over $175.7 million.