KPG Plans to Acquire Over $1B of NYC Office, Retail Real Estate

KPG, which specializes in value-add acquisitions and development, believes the New York market will recover.

By Les Shaver | May 14, 2021 at 05:50 AM

NEW YORK CITY – New York office developer KPG Funds plans to acquire over $1 billion in New York City office and retail assets.

KPG, which specializes in value-add acquisitions and development, believes the New York market will recover.

To help lead that growth, KPG hired Noah Kaufman as its first managing director of acquisitions. Kaufman, who will oversee KPG’s acquisition and asset management functions, brings more than 20 years of acquisitions and asset management experience to the growing real estate firm.

Before coming to KPG, Kaufman was a senior executive at several real estate firms, including The Zar Group and CLK properties. His addition is part of a KPG initiative to bulk up its investment and asset management team. The firm expects substantial deal volume in 2021 and 2022.

After struggling during the pandemic, New York City is starting to show signs of recovery, according to a recent VTS Office Demand Index (VODI).

New York City experienced a severe crash with its VODI falling 121 index points (down 95%) from March to May 2020. Since then, demand has flourished and its March 2021 VODI of 102 was just 13% below New York City’s average VODI in 2018-2019.

The potential resurgence of the New York market has fueled some recent deals, including Harbor Group International’s recapitalization of its 32-story office tower in New York City’s Financial District. The company refinanced the existing senior mortgage with an initial $107.7 million senior loan from an insurance company lender with a future funding component of up to $8.4 million for future leasing. The fresh capital retired Paramount Group’s preferred equity stake and is funding costs associated with recent leasing activity at the building, which is located at 55 Broadway.

“As the New York office market begins to recover, we believe the recapitalization of 55 Broadway will create new opportunities for the property and position it to take advantage of the improving Downtown market fundamentals,” said Harbor Group president Richard Litton in prepared remarks.