One Seneca Tower was sold for $12 million.
A local real estate source confirmed Douglas Jemal of Washington, D.C., agreed to buy the vacant 38-story building, Buffalo’s tallest skyscraper, for a fraction of what it was worth in 2005, when it was purchased for $95 million.
That demonstrates how far the building’s value has fallen after its leading tenants departed, leaving its former owner unable to keep up mortgage payments or basic operations.
The purchase price, which has not been officially announced because the deal is not final, is roughly equal to a professional appraisal performed in September 2014 during the foreclosure process on the building. That calculation by the Syracuse office of Cushman & Wakefield’s Valuation & Advisory Service was far lower than previous estimates, including the city’s formal assessment of $20.2 million.
It’s also less than half of what New York City businessman Harvey Kaylie offered to pay for the building both at the foreclosure auction in October 2015 and again in a formal purchase agreement in the spring. That contract fell through when Kaylie pulled out at the last minute of his due-diligence because he couldn’t line up enough financing or partners to make the project work.
And it’s just 14 percent of the $95 million that former owners Seneca One Realty of New York City paid in 2005, when the 1.2-million-square-foot complex was fully occupied. HSBC Bank USA and law firm Phillips Lytle LLP, the prime tenants, both left in late 2013.
Finally, it also represents a significant loss for the bondholders on the $91 million mortgage on the building. They may never recoup the rest of their investment.
But it won’t be the last money poured into the complex. Jemal, founder and head of Douglas Development Corp., the second-largest commercial real estate firm in the nation’s capital, expects to close on the purchase in mid-October, before beginning what is expected to be a multiyear redevelopment into a mixed-use facility with residential, hotel, office and retail space. That’s widely expected to cost between $100 million and $200 million, depending on how much work is done.