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Moise Safra & Chinese Developer Purchase 40% Stake in GM Building

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Banking magnate Moise Safra and his wife (back right) enjoy a Yeshiva University dinner with friends and fellow prominent Jewish community members Ira and Ingeborg Rennert (back left) and Elie and Marion Wiesel.

Banking magnate Moise Safra and his wife (back right) enjoy a Yeshiva University dinner with friends and fellow prominent Jewish community members Ira and Ingeborg Rennert (back left) and Elie and Marion Wiesel.

Banking magnate Moise Safra and his wife (back right) enjoy a Yeshiva University dinner with friends and fellow prominent Jewish community members Ira and Ingeborg Rennert (back left) and Elie and Marion Wiesel.

In a deal that unites two disparate cultural backgrounds, Brazilian banking magnate Moise Safra – a scion of the prominent Safra banking family and leading member of New York’s Sephardic community – late last week paid $1.4 billion to purchase a 40% stake in Manhattan’s General Motors Building in partnership with noted Chinese developer Zhang Xin, who serves as chief executive officer of Beijing office landlord Soho China Ltd.. The transaction is particularly newsworthy because it values the famed structure at approximately $3.4 billion, apparently rendering it the most valuable office building in the United States.

Relatives of Zhang and the Safra family’s New York-based investment division M. Safra & Co. purchased the stake through an entity entitled Sungate Trust.

M. Safra is an arm of the banking family of the legendary Edmond J. Safra, the founder of Republic National Bank of New York who died in 1999 in a suspicious Monaco fire that authorities ruled to be arson.

Safra and Zhang bought their share in the building, which is located at 767 Fifth Avenue and encompasses an entire block between Fifth and Madison Avenues and 58th and 59th Streets, from a group of Middle Eastern sovereign-wealth funds. The remaining 60% of the building is owned by Boston Properties Inc., which controls the sizable piece of real estate and has no plans to sell its share.

With her participation in what is said to be one of the largest U.S. real estate deals by an individual Chinese investor, Zhang is gaining an interest in a Manhattan landmark that has been long sought after by investors. Zhang and her husband, Pan Shivi, have spent the past two decades planting new developments in Soho, thereby transforming their company into the largest developer of high-level office properties in Beijing and Shanghai.

The GM Building deal is occurring at a time when yield-starved investors have been expending larger-than-ordinary sums to obtain premiere office properties, causing values to rise higher than rents and occupancy. These latter two categories have grown at a notably slow pace because tenants have behaved tentatively towards expanding and committing to new leases.

A 50-story tower situated near the southeast corner of Central Park, the white marble General Motors Building rates highly in the real estate industry as a result of its location across from the Plaza Hotel. Estee Lauder Cos. and the Weil, Gotshal & Manges law firm are just two of its prominent office tenants. Moreover, the building boasts some prize retail tenants, including toy store legend FAO Schwarz and an Apple outlet.

This latest deal is the first major one involving the GM building since 2008, when Boston Properties and the Middle Eastern group paid $2.8 billion to purchase it from Harry Macklowe. The Middle Eastern group, which included the sovereign-wealth funds of Kuwait and Qatar, as well as Dubai-based private equity firm Meraas Capital, has its investments managed by Goldman Sachs. The $2.8 billion remains the highest price that has ever been paid for the complete sale of a single office building in the United States.

Last year, the Middle Eastern sovereign wealth group recruited real-estate services firm CBRE to market the high-end property. CBRE also coordinated the sale for Macklowe. The new price assigns the 2 million-square foot building – which has 150,000 square feet devoted to retail space – a value of approximately $1,700 per square foot.

Informed observers expect that the new owners of the minority stakes will retain the status of passive investors. “It has always been pursued,” said Darcy Stacom, a vice chairman of CBRE Group, who brokered the sale with her partner William Shanahan. “People understand its inherent value.”

With its sweeping views of Central Park from its higher floors, the General Motors Building has drawn major law firms and hedge funds as tenants, and has been able to command some of the highest commercial rents in New York City.

Born in 1935, Moise Safra is a Lebanese/Brazilian businessman and the founder of Banco Safra. He was born into a wealthy banking family in Lebanon. The family’s history in banking originated with caravan trade between Alexandria and Constantinople during the Ottoman Empire. The family relocated to Beirut after World War I, as Beirut was home to an already thriving Jewish community. Eventually, the Safras decided to move to Brazil in 1952. In 1955, Moise’s 23-year-old brother, Edmond Safra, and his father, Jacob Safra, started working in Brazil by financing letters of credit for trade in São Paulo.

Moise Safra established himself in Brazil where he acquired citizenship and founded Banco Safra with his brothers Edmond and Joseph.

Banco Safra ranks tenth among Brazil’s largest sector financial institutions in terms of total assets. The Bank is part of the larger Safra Group of banks and financial institutions.

In January 2012, the Moise Safra Community Center opened on the Upper East Side of New York City. Its mission is to be the premier social, recreational, cultural and educational center that serves the Upper East Side’s Sephardic and Jewish community. It will be a welcoming Jewish “neighborhood” that links every Jew to the home, the community, and the rest of the Sephardic and Jewish world.

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