Specialty Chemicals Firm Reacts to Thermal Plaza District Market

August 24, 2007 by jack petrie.

Altana Exits “Henri Bendel” Building

Altana AG, the German chemical and pharmaceutical firm, recently negotiated a termination of its New York City leasehold at 712 Fifth Avenue. Altana AG was represented by Kristian Hansen and Jack Petrie of CresaPartners.

The lease termination was in part driven by the historically hot Plaza District real estate market, as demonstrated by asking rentals at 712 Fifth Avenue which currently exceed $150 per rentable square foot (”RSF”) per annum. This boutique building, built in 1990, is home to many legendary fashion companies, including Christian Dior, Roberto Cavalli, Canali and the retail presence of Henri Bendel.

Boutique Building Caters to High-End Financial Services Firms

In 1991 when the building opened, asking rents were in the $50-65/rsf range. However, the current rising rents have been fueled by the property’s attraction to financial services firms, particularly private equity firms and hedge funds, which tend to be less sensitive to market rental economics.

Current tenants at 712 Fifth Avenue include hedge funds Elliott Associates, founded by billionaire Paul Singer and San Francisco-based TSG; investment firms Mannheim LLC, NCH Capital Advisors and Vector Group; CVC Capital Partners, a private equity firm; and real estate firms Buttonwood Real Estate, Sonnenblick-Goldman, Pierson Capital (construction finance), The Gale Company and Stockbridge Capital.

The first five stories of the property are landmarked, formerly housing the Rizzoli Building and a Coty perfumerie with windows designed by Rene Lalique. With the recent influx of financial services firms relocating into the property, already some of the fashion companies have begun to relocate to more affordable locations.

Strong 2007 Performance by Specialty Chemical Firm

Altana AG, meanwhile, has posted robust growth in the first six months of 2007, with sales (€705.7 million) up by over 7 percent and earnings (€125.2 million) up by over 22 percent, based on double-digit earnings increases in all four company divisions (BYK Additives & Instruments, Eckart Effect Pigments, Elantas Electrical Insulation and Actega Coatings & Sealants).

“In the first half-year of our new group structure as a pure specialty chemicals company we have demonstrated a very satisfying development and were able to increase sales and earnings substantially,“ stated Dr. Matthias Wolfgruber, CEO of Altana AG. “We have thus successfully lived up to the confidence placed in us by the capital markets and the general public after the new start of Altana and we are well positioned to continue our path of profitable growth into the future.“

The termination of the 712 leasehold will make a small but high profile reduction in occupancy costs in the near term for Altana AG.

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