Elad Group, Yitzhak Tshuva’s private North American real estate company, has completed its purchase from the city of New York, together with The Peebles Corporation, of 346 Broadway in Manhattan.
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Also known as 108 Leonard Street and designated as a landmark building, 346 Broadway was designed by McKim, Mead & White as the headquarters of the New York Life Insurance Company in 1898. Situated in Lower Manhattan’s now-prestigious TriBeCa neighborhood, it currently houses the city’s Criminal Summons Court and part of its Probations Department.
Elad, whose CEO is Udi Erez, and Peebles, whose chairman and CEO is R. Donahue Peebles, will pay the city $200 million for the building. Peebles is the largest African American-owned real estate development firm in the United States, with a multibillion-dollar development portfolio of luxury hotels, residential and commercial properties in New York, Washington, Las Vegas and Miami.
Tshuva, controlling shareholder of the Delek Group, became an energy tycoon after the discovery of natural gas in the Tamar and Leviathan fields off the Israeli coast. He previously owned New York’s Plaza Hotel.
Current tenants of the 40,000-square-meter building are scheduled to begin relocating in April 2014. The partners plan to convert the property into 100 upscale apartments, with commercial space as well. The purchase price reflects a cost of $550 per square meter. The apartments are expected to go for around $2,000 per square meter, netting the partners profits of $200 million. The partners are borrowing $140 million for the project from investment bank Goldman Sachs and providing the remaining capital themselves. Ownership is divided between Elad (65%) and Peebles (35%). The conversion is projected to take two years and to cost $400 million.
Since becoming CEO, two and a half years ago, Erez has been leading a drive to sell many of the Elad Group’s holdings at top prices. He negotiated the sale of its remaining stake in the Plaza to the Indian investment group Sahara, for a net cash flow of $220 million. This year, Elad Group purchased from the U.S. investment company Carlyle Group a parcel of land at Riverside South (Trump Place), together with the Silverstein Properties group, for $170 million. The cost of the massive residential and commercial development is estimated at $650 million.