On Sunday, Israel’s Property and Skyscraper Corp said that it had agreed to sell the HSBC Tower building in midtown Manhattan to New York-based real estate firm Innovo Property Group for $855 million, resulting in a $45 million net loss.
Discount Investment Corp, which owns 63 percent of the Israeli company, said it had also sold the property in Israel for 390 million shekels ($123 million).
Doron Cohen, the CEO of both Property and Building and Discount, stated that management was focusing on income-producing properties in Israel and that the funds received from both deals would allow it to pursue this strategy.
“We’re keeping the strategy in place and looking into the prospect of realizing additional assets in the United States and Israel,” Cohen said, stressing that the sale of the HSBC building came despite “doomsday” predictions for the commercial real estate market in the United States.
He mentioned Tivoli Village, a high-end apartment development in Las Vegas that launched this year and maybe sold as part of the company’s efforts to increase cash and decrease debt.
Property and Building purchased the 30-story, 80,000 square meters HSBC Tower for $353 million in 2009 with the help of conglomerate Koor Industries. Property bought Koor’s stake in the skyscraper, which has a 99 percent occupancy rate, in 2011. The building was purchased by HSBC in the 1990s.
The HSBC Tower was valued at $864 million in Property and Building’s books as of Sept. 30. It stated the sale will result in a net loss of $45 million after costs.
The deal is planned to close on April 1, 2022, subject to Innovo’s right to advance the date and the option to postpone the closing two times for 30 days each.
Property expects to generate $343 million in net cash flow after the sale.
Its stock was down 0.7 percent in Tel Aviv afternoon trading.
