Manhattan properties up for sale in test for market

Bloomberg

Three properties on Fifth Avenue in midtown Manhattan are coming up for sale, providing a test for the biggest U.S. commercial real estate market amid signs that a six-year boom in prices is coming to an end.
Joseph Sitt’s Thor Equities is seeking bids for office-and-retail buildings at 693 Fifth Ave. and 590 Fifth Ave., according to three people with knowledge of the
matter.
They are expected to fetch about $600 million combined, two of the people said. A third property, the retail portion of 530 Fifth Ave., is being sold by Thor and partner General Growth Properties Inc., according to the people, who asked not to be identified because the process is private.
Landlords in cities around the country are watching for fallout as slowing growth in China and the rout in oil prices roil global markets. Commercial-property values fell for the first time in six years in January, reflecting a pullback after cheap debt and a flood of cash from overseas investors pushed prices to records, according to an index by Moody’s Investors Service and Real Capital Analytics Inc. released earlier in the week.
The Moody’s index has almost doubled since its January 2010 trough and is about 17 percent higher than its previous peak. Prices have jumped the most for office buildings in top cities such as New York and San Francisco, more than tripling since the market’s bottom.
Rates of return for U.S. property investors are falling and it’s getting harder to secure debt financing, particularly in the $550 billion commercial-mortgage bond market, Jon Gray, head of real estate for Blackstone Group LP, said at a meeting of the University of Texas Investment Management Co. last week.
Thor Equities “actively invests for a range of institutions, and we regularly buy and exit assets for them,” the company said in a statement. A spokesman for General Growth, Kevin Berry, declined to
comment.