By: Meyer Wolfsheim

A prime Midtown office building has a new owner, a major new plan — and a surprising twist, the NY Post reported.

Investor David Werner has closed on the purchase of 300 E. 42nd St., an 18-story, 235,000-square-foot office and retail building, for just $52 million, the NY Post reported. Although the deal has not yet appeared in public records, the sale officially closed last Wednesday, the NY Post reported.

The price represents a deep discount — less than half of what the property sold for in 2019, the NY Post reported. But instead of holding onto the entire building, Werner is already flipping most of it for a partial residential conversion while retaining the building’s valuable 7,300 square feet of retail space for himself, the NY Post reported.

The transformation will be powered by a $45 million pre-development acquisition loan from Ran Eliasaf’s Northwind Group, a private equity firm, the NY Post reported. The loan also closed last week, with a construction loan anticipated within the next 9 to 12 months, the NY Post reported.

Northwind has become a major player in New York City real estate finance, previously providing a $313 million loan to restart the once-stalled 125 Greenwich Street condo tower downtown, the NY Post reported.

Eliasaf declined to reveal who Werner is flipping the majority of 300 E. 42nd St. to, the NY Post reported. However, residential market sources told Realty Check, cited by the NY Post, that the buyer is likely CSC, a real estate investment firm that specializes in redeveloping distressed properties.

CSC’s track record in New York includes the conversion of a former Catholic church into residential units at 2045 Madison Avenue in East Harlem and the transformation of a rundown hostel into the trendy Riff Chelsea Hotel on Eighth Avenue, the NY Post reported.

As for the plan at 300 E. 42nd St., Eliasaf shared that approximately 90,000 square feet on the higher floors — space largely leased to diplomatic and government tenants — will remain office space, the NY Post reported.

Meanwhile, more than 93,000 square feet of currently vacant space will be converted into about 135 rental apartments, the NY Post reported. The project will likely take advantage of the state’s 467-m tax abatement program, which promotes residential conversions in exchange for setting aside 20% of the units as affordable housing, the NY Post reported.

Eliasaf told the NY Post that delivering mostly free-market rental units is an especially attractive opportunity, particularly in Midtown where new supply is scarce. “The ability to deliver mostly free-market new supply is very attractive, especially in Midtown,” Eliasaf said.

The building at 300 E. 42nd St. sits in a booming corridor for residential redevelopment, standing diagonally across from two former Pfizer office buildings where a massive 1,600-unit rental project is underway, the NY Post reported.

Notably, Werner is also a partner in that nearby Pfizer redevelopment effort, teaming up with Nathan Berman’s MetroLoft, the NY Post reported.

With 300 E. 42nd St. now poised for a dramatic transformation and a wave of fresh housing on the horizon, Midtown East’s landscape is rapidly shifting — and Werner remains right at the center of the action, the NY Post reported.