Blackstone Group LP agreed to buy a roughly 50 percent stake in six New York-area office properties from RXR Realty, its largest acquisition yet in an expansion toward purchasing stable, well-leased real estate.
RXR plans to sell Blackstone part ownership in the 5.3 million-square-foot (492,000-square-meter) portfolio, valued at $4 billion, the companies said in a statement Wednesday. The deal involves Manhattan’s Starrett-Lehigh building; 1330, 620 and 1166 Avenue of the Americas; 340 Madison Ave.; and University Square Campus near Princeton, New Jersey.
RXR, a Uniondale, New York-based real estate company run by Scott Rechler, said it will continue to operate the properties.
RXR is “uniquely positioned to unlock the incremental upside in the portfolio,” Jon Gray, global head of real estate for Blackstone, said in the statement. “We look forward to finding more opportunities to work on together in the future.”
Blackstone, the world’s biggest private-equity investor in real estate, is raising a new fund to buy core-plus real estate, or prime properties that may require relatively minor leasing or renovations to boost returns. Chairman and Chief Executive Officer Stephen Schwarzman said last year the company could have $100 billion of such properties under management over the next decade.
For RXR, the deal offers the opportunity to “harvest value” from Manhattan properties acquired since 2009, as the market recovered from the global financial crisis, Rechler said in an interview. Prices for office buildings in New York have surpassed the prior peak, propelled by demand from both domestic and foreign investors seeking safety and steady growth.
“It’s a way of taking chips off the table, and allows us to invest in new opportunities to create value,” Rechler said. “That’s always been our mantra.”
RXR DealsNew York office rents and property values should continue to rise, Rechler said.
“If I thought we had hit the top, we would have sold 100 percent of our interests and we wouldn’t be buying 32 Old Slip, 61 Broadway, 530 Fifth,” he said, referring to recent RXR transactions.
The transaction is the first large-scale recapitalization of the RXR portfolio since the company was created in 2007, following the sale of Rechler’s Reckson Associates Realty Corp. to SL Green Realty Corp., he said.
Deal CompromiseThe deal with Blackstone is “something of a hedge” by RXR, said Ben Carlos Thypin, director of market analysis at New York-based property-research firm Real Capital Analytics Inc.
“It’s a compromise between selling outright and calling a top, and continuing to ride things out,” he said. “It’s the best of both worlds.”
Read More: http://www.bloomberg.com/news/articles/2015-02-11/blackstone-to-buy-stake-in-new-york-area-rxr-buildings
For some time now, commercial real estate observers have speculated about the endgame for Equity Office Properties in the Bay Area.
EOP's owner, Blackstone Group LP, was selling off assets in chunks — a building here, an office campus there. And while rumors swirled of more, and larger, sale offerings, news that Hudson Pacific Properties had agreed to buy the entire South Bay and Peninsula portfolio still came as stunning news.
That's partly because the $3.5 billion transaction was off market, executives said on a Monday morning conference call, keeping the deal very much below the radar.
The direct deal suited both the buyer and seller's goals: Blackstone wanted a counterpart that would let it maintain some exposure in a top office market. And Hudson Pacific, which long coveted a position in the Bay Area, would partially finance the deal by issuing Blackstone shares — making the giant private equity firm a 48 percent owner.
"When we sat around and said, 'We want to continue to play in Northern California, how do we do this,' what we did is pick up the phone and call Victor (Coleman, Hudson's CEO) and say, 'How can we work out a transaction?'" Jonathan D. Gray, head of global real estate for Blackstone, said on the call.
"We did not market these assets," he had said a few beats earlier. "There's plenty of liquidity in the market for high-quality office in Northern California."
The transaction is likely the largest office sale in the country since 2007, said Ben Thypin, director of market analysis for Real Capital Analytics, a research firm. It comes as the region's office market drives forward as one of the hottest in the U.S., drawing investors from around the world. Blackstone didn't want to cut its upside potential in that environment, apparently.
Fresh off the acquisition of a 45 percent stake in Boston Properties’ 601 Lexington Avenue, the sovereign fund that manages Norway’s substantial oil wealth is making a play for Blackstone Group’s 1095 Sixth Avenue, according to a source familiar with the talks. A deal for the tower, expected to fetch up to $2.25 billion, would be the biggest office tower sale in New York since the GM Building traded hands in 2008.
Norges Bank Investment Management is gunning to buy the 42-story, 1.2 million-square-foot tower, which is located between 41st and 42nd streets and overlooks Bryant Park, a source with knowledge of its moves told The Real Deal. It’s also interested in buying into two Boston Properties’ assets in Boston: a 37-story office tower at 100 Federal Street and a 31-story office tower in the Atlantic Wharf complex.
The $5.6 trillion fund, which is associated with nearly $14 billion in total property acquisitions over the last decade, was given a mandate in 2010 to invest up to 5 percent of its assets in real estate outside Norway, according to Real Capital Analytics.
Blackstone acquired 1095 Sixth in 2007, as part of its $39 billion purchase of Sam Zell’s Equity Office Properties Trust. The building, which is 99 percent leased, is anchored by insurance giant MetLife, and Verizon Communications recently reestablished its headquarters there. Whole Foods is also taking about 32,000 square feet at the building.
Besides its investment in 601 Lexington, Norges’ recent Manhattan investments include a $684 million stake in Boston Properties’ 7 Times Square and an investment in 470 Park Avenue South, Real Capital data show. If Norges manages to acquire the tower, the move would be in line with some of these recent deals, according to Ben Thypin, Real Capital’s director of market analysis.
Read More: http://therealdeal.com/blog/2014/09/17/norwegian-fund-pushing-to-buy-blackstones-2-2b-1095-sixth-source/#sthash.ydRuXLEk.dpuf
Blackstone Group LP (BX) is preparing to sell New York’s 1095 Avenue of the Americas, a 42-story office tower that may fetch one of the highest prices ever for a U.S. skyscraper, according to two people familiar with the plans.
Blackstone has hired Eastdil Secured LLC to market the 1.2 million-square-foot (111,500-square-meter) property, said one of the people, who asked not to be identified because the plans are private. The building, soon to be the headquarters of Verizon Communications Inc. (VZ), may sell for about $2.25 billion, the person said.
“If they were to hit this number, it would show the market is still extremely strong for these assets,” said Ben Thypin, director of market analysis at property-research company Real Capital Analytics Inc. “If you want to buy an office building of this size, you only have so many choices.”
Blackstone, the world’s biggest alternative investment manager, has been selling some assets from its 2007 takeover of Sam Zell’s Equity Office Properties Trust as real estate in prime U.S. coastal markets rebounds. The tower, between 41st and 42nd streets and also known as 3 Bryant Park, was purchased as part of the $39 billion acquisition. It houses insurer MetLife Inc. (MET)’s administrative offices in addition to Verizon, which will make the building its headquarters on Sept. 1.
Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment on plans to sell the building. A telephone call to Martha Wallau, an Eastdil spokeswoman, wasn’t immediately returned.
The highest-valued building in the U.S. is New York’s General Motors Building, according to New York-based Real Capital. The families of Chinese real estate developer Zhang Xin and Brazil’s Safra banking empire bought a 40 percent stake in the tower for about $1.4 billion last year, implying a $3.4 billion value for the 50-story property.
A sale of more than $2 billion would be the biggest of a single U.S. property since the GM Building sold to Boston Properties Inc. in 2008, according to Real Capital.
Blackstone has been taking advantage of strong demand for high-quality U.S. real estate from foreign wealth funds and pension plans to sell assets it has improved through leasing gains or renovations. The Bryant Park building has undergone a “successful three-year, $300 million renovation,” according to the building’s website. Itsoffice space is 99 percent leased, according to CoStar Group Inc., a Washington-based research firm that tracks office leasing.
Building KeptWhile it sold many of the buildings it bought in the Equity Office deal almost immediately, including seven midtown Manhattan towers, Blackstone kept 1095 Avenue of the Americas, which was being completely rebuilt from its steel frame out. Blackstone paid about $1.47 billion for the building as part of the takeover, according to data compiled by Real Capital.
“The office market has come a very long way” since the acquisition, Thypin said in a telephone interview. “Even if this doesn’t sell for exactly what they’re asking, it’s still going to be a very high price.”
READ MORE: http://www.bloomberg.com/news/2014-08-28/blackstone-said-to-plan-nyc-sale-for-more-than-2-billion.html
Equity Office Properties' sale last week to a Brookfield Asset Management fund of 459,000 square feet of San Jose office buildings brings the total footprint of EOP's sold space in the last 18 months to more than 3 million square feet. The huge landlord continues to cash out in Silicon Valley — with more sales on the way as the market remains strong.
In the latest deal, EOP unloaded its 373,754-square-foot Rio Robles office park, which consists of seven buildings at the intersection of North First Street and Rio Robles in North San Jose; as well as the 85,585-square-foot 3553 North First St., which is located adjacent to the Rio Robles Properties
Brookfield paid $85 million, or 185 per foot, for the portfolio. The transaction was arranged by Joe Moriarty of CBRE's San Jose office, who declined to comment.
Counting the latest transaction, since last September EOP has now sold off at least 3.15 million square feet, not counting two major redevelopment sites sold to Kaiser Permanente and the Irvine Company.
Many of the buildings that have sold, including those in last week's deal, are part of the huge CarrAmerica portfolio that EOP parent Blackstone purchased in 2006. Blackstone acquired Equity Office in 2007. Locally, the portfolio operates under a unified EOP brand.
Ben Thypin, director of market analysis for Real Capital Analytics, said that the sell-off isn't surprising given a 5- to 7-year hold strategy. In addition, there is plenty of institutional investor money looking for opportunities right now in core markets, he said.
"There's certainly a lot of demand in your market," Thypin said.
Read More: http://www.bizjournals.com/sanjose/news/2013/11/23/latest-deal-propels-equity-office.html?page=all
While the world is anxiously watching to see how the European debt crisis will unfold, many real estate investors in the United States are eagerly seeking opportunities to reap profits from the Continent’s distress.
Private equity firms, whose investors include pension funds, university endowments and foundations, have been vying to buy portfolios of European bank debt consisting of troubled commercial real estate mortgages. By acquiring these loans at deep discounts, they hope eventually to earn generous returns of 12 to 18 percent, investors and advisers say.
So far, the pace of sales has been modest. Last year, the region’s institutions received an infusion of capital from the European Central Bank, easing the pressure to trim their balance sheets.
In 2011, CBRE, the giant real estate company, tracked more than 20 European loan portfolio sales with a value of 20 billion euros (about $26 billion at current exchange rates). The pace so far this year has dropped, with 14 transactions totaling 7.5 billion euros. Another 11 billion euros’ worth of loans are currently being marketed, CBRE said. Many individual loan sales are also taking place in private.
“The market is opaque,” said Ben Carlos Thypin, director of market analysis at Real Capital Analytics, a New York research firm. “There’s certainly more going on behind the scenes than is clear now.” The buyers have primarily been big names in private equity that are based in the United States — and are accustomed to taking on risk — including the Blackstone Group of New York, Lone Star Funds of Dallas and Colony Capital of Santa Monica, Calif. All are beefing up their presence in Europe, by adding employees, acquiring local real estate companies, or both.
Read More: http://www.nytimes.com/2012/09/19/realestate/commercial/american-real-estate-investors-seek-opportunities-in-europes-debt-crisis.html?ref=commercial
When The Blackstone Group agreed to buy the US mall portfolio of Sydney-based Centro Properties Group last March for $9.4 billion, one might have imagined the deal impossible to finance. However, a significant portion of the investment was funded via the commercial mortgage backed securities (CMBS) market in a sign that this relatively dormant part of real estate finance was re-awakening.
“These private equity firms are hoping the CMBS market is
available both to finance their acquisitions and refinance maturing
loans on properties they already own,” says Ben Thypin,
director of market analysis at Real Capital Analytics. “So it’svery much in their best interest to have a robust CMBS market.”
Read More: http://www.perenews.com/Article.aspx?aID=0&article=65935 (login required)
With the 597 Fifth deal*, some brokers say Sitt overpaid for a building whose street-level interior space is landmarked, meaning that it will be difficult to stick just any old tenant in there.
However, Thor may be gambling the building can fetch higher rents, which is a bet many private-equity players make, said Ben Thypin, director of market analysis for Real Capital Analytics. “They’re always looking for the Goldilocks of risk,” Thypin said. “Risky enough, but not too risky.”
Read More: http://therealdeal.com/issues_articles/private-equity-unwrapped/
Blackstone Group LP, the world’s largest private-equity firm, agreed to pay $1.08 billion to buy Duke Realty Corp.’s suburban office holdings in U.S. cities including Chicago, Dallas and Atlanta.
Blackstone Real Estate Partners VII will buy the 82 buildings with a combined 10.1 million square feet (938,000 square meters) of space, Indianapolis-based Duke Realty said in a statement. They include “substantially” all of Duke’s wholly owned suburban office properties in the Midwest and South.
Blackstone has invested more than $7 billion in real estate this year, and has raised $4 billion for its latest property fund that the New York-based firm expects to exceed $10 billion, Chairman Stephen Schwarzman said yesterday. Managers such as Fortress Investment Group LLC, Colony Capital LLC and Starwood Capital Group LLC also are pitching new property funds.
“Blackstone has a lot of capital to deploy so they need to deploy it in large chunks,” Ben Thypin, director of market analysis for New York-based Real Capital Analytics Inc., said in a telephone interview. “It seems like they got a good discount to what comparable properties have been trading for in those regions, especially considering how well-leased and relatively new the properties are.”
Read More: http://www.businessweek.com/news/2011-10-21/blackstone-to-buy-suburban-u-s-offices-for-1-08-billion.html
JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) are among banks that made final bids to buy portions of Anglo Irish Bank Corp.’s $9.65 billion of U.S. property loans, according to three people with knowledge of the sales.
The lenders are looking to acquire pieces of the $4.52 billion of performing loans the Dublin-based bank is shedding, said the people, who asked not to be identified because the talks are private. Investor groups led by private-equity firms Blackstone Group LP (BX), working with Deutsche Bank AG (DBK), and Lone Star Funds also submitted offers for parts of the portfolio, which include $5.13 billion of subperforming and non-performing debt, the people said.
“Banks like Wells and JPMorgan can afford to pay more than a nonbank for the performing loans,” said Ben Thypin, director of market analysis for Real Capital Analytics Inc., a property- research firm in New York. “Private-equity firms like Blackstone and Lone Star can bid aggressively on the nonperforming pieces because they have a large workout infrastructure in place.”
Read More: http://www.bloomberg.com/news/2011-08-25/jpmorgan-wells-said-to-make-final-bids-for-anglo-irish-real-estate-loans.html
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.