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
Barry Sternlicht’s Starwood Capital Group agreed to sell New York’s luxury Baccarat Hotel to an affiliate of China’s Sunshine Insurance Group.
The 114-room property on Manhattan’s West 53rd Street is scheduled to open next month, Starwood said in a statement Monday. The Beijing-based insurer agreed to pay $230 million for the hotel, which occupies the first 12 floors of the 50-story Baccarat Hotel & Residences project, the Wall Street Journal reported on Feb. 6.
Chinese companies have accelerated real estate investments in global gateway cities such as New York. In October, Beijing’s Anbang Insurance Group Co. agreed to pay $1.95 billion for the Waldorf-Astoria Hotel on Park Avenue, an Art Deco landmark and one of the city’s signature properties. It would be highest price paid by a Chinese buyer for a standing U.S. building, Kevin Mallory, global head of hotels for CBRE Group Inc., said when the deal was announced.
That the buyer for the Baccarat “is yet another Chinese insurer could signal an increase in the pace of Chinese institutional capital looking abroad for diversification and safety,” said Ben Carlos Thypin, director of market analysis at property-research firm Real Capital Analytics Inc.
At about $2 million per room, the price for the Baccarat would be the second-highest on that basis for a New York hotel, behind the $2.5 million per room paid for a 75 percent stake in the Plaza Hotel in 2012, Thypin said. That price included the Plaza’s retail space, he said.
General Growth Properties Inc. (GGP) agreed to buy the Crown Building on Manhattan’s Fifth Avenue in partnership with New York landlord Jeffrey Sutton to build its presence in the world’s most-expensive retail district, two people with knowledge of the negotiations said.
The partners agreed to pay about $1.75 billion for the 390,000-square-foot (36,200-square-meter) tower at 730 Fifth Ave., at the southwest corner of 57th Street, one of the people said. Both people asked not to be identified because the negotiations are private.
At about $4,490, the price per square foot sets a world record for an entire office building, according to Ben Thypin, director of market analysis at Real Capital Analytics Inc., a New York-based real estate research firm. Much of the tower’s value is in its roughly 50,000 square feet of retail space.
The property is part of Fifth Avenue’s “golden mile,” from about 49th Street to the edge of Central Park at 59th Street, home of Apple Inc.’s “cube” store, Jacques Gordon, global strategist for LaSalle Investment Management, said in an interview. The building’s retail tenants include jewelers Bulgari SpA and K. Mikimoto & Co.
The Korean Teachers Credit Union and TIAA-CREF are staking a claim on Manhattan’s Socony-Mobil building in the first investment of a $1 billion joint venture.
The partners last week acquired a $175 million loan on the landmark office tower across the street from the Chrysler Building, according to Suzan Amato, head of managed accounts and joint ventures in global real estate at New York-based TIAA-CREF. The financing was part of David Werner’s $900 million purchase of the property this year.
Asian investors, seeking higher returns and a safe haven for cash, are the source of some of the global flood of money into Manhattan real estate that’s pushing office-building values to records. While China has been the top Asian buyer in New York, investors from Korea andSoutheast Asia are poised for more deals as the relatively shallow real estate markets in their home countries become saturated, according to Amato.
“Asian countries are on a rapid growth trajectory,” she said. “This is a very fertile area for us.”
South Korea is the fourth most-active Asian equity investor in Manhattan property, behind China,Singapore and Australia, according to Real Capital Analytics Inc., a real estate research company.
Rather than buying equity interests in buildings, TIAA-CREF and KTCU are seeking to invest in mortgages backed by office towers, retail properties, warehouses and apartments in major U.S. cities. The venture between the two companies, which manage teachers’ savings in their respective countries, is 51 percent owned by TIAA-CREF and 49 percent held by Seoul-based KTCU.
“In the Korean investment environment, where interest rates remain low at about 2 percent, we believe this is a good opportunity to diversify the portfolio through investments in prime assets in theUnited States with strong fundamentals and steady income streams,” Sung-Seok Kang, head of global investments at KTCU, said in an e-mail. “We plan to expand this relationship further into other investment types.”
The Socony-Mobil investment is a mezzanine loan, which is junior to a first mortgage and pays a higher yield to compensate for the risk. Such investors typically have the right to seize the borrower’s equity in the event of default. KTCU last year underwrote $50 million in mezzanine debt on the Seagram Building, another New York landmark.
Mezzanine lending is a complex approach to property investment that not all foreign investors are comfortable with, said Ben Thypin, an analyst at New York-based Real Capital. Koreans typically prefer a direct ownership stake in a property because it gives them more control of the asset, he said.
Read More: http://www.bloomberg.com/news/2014-12-12/manhattan-towers-lure-koreans-in-1-billion-joint-venture.html
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
Google Inc. (GOOG)’s purchase of a San Francisco waterfront property underscores the rising demand for commercial real estate in the city, with office-building sales on pace for their strongest year since the market’s peak.
Google’s $65 million acquisition brought San Francisco office sales through last week to $3.67 billion, up almost fourfold from the same time a year earlier and headed for the highest annual tally since $8.97 billion in 2007, according to Real Capital Analytics Inc. Blackstone Group LP (BX)this month completed a $588 million deal for a 49 percent stake in the One Market Plaza complex, the biggest transaction so far in 2013.
Technology companies are fueling the surge in demand as office vacancy shrinks, even with new projects rising, said Grant Lammersen, a broker at Cushman & Wakefield Inc. who represented the sellers in Google’s deal. Buyers are seeking to expand holdings in a market where prime rents jumped 9.6 percent in the second quarter from a year earlier, more than triple the U.S. average, according to Cushman.
“There’s seemingly insatiable demand in San Francisco,” Ben Carlos Thypin, director of research analysis at New York-based Real Capital, said in a telephone interview. “Institutional investors are buying the highest-quality properties they can get their hands on.”
Read More: http://www.bloomberg.com/news/2014-07-15/san-francisco-offices-lure-google-with-sales-nearing-peak.html
Fortress Investment Group LLC is preparing a bid to buy Stuyvesant Town-Peter Cooper Village, the Manhattanapartment complex whose future has been in limbo since its owners defaulted on a $3 billion mortgage four years ago, according to a person familiar with the plans.
The New York-based private-equity firm is seeking financing for an offer valued at about $4.7 billion, said the person, who asked not to be identified because the discussions are private. A deal would involve bringing in equity partners to contribute cash, the person said.
Stuyvesant Town, Manhattan’s biggest rental community, is currently under the control of CWCapital Asset Management LLC, which is owned by Fortress. CWCapital is a special servicer in charge of representing bondholders after owners Tishman Speyer Properties LP and BlackRock Inc. walked away from their investment in January 2010, one of the highest-profile casualties of the property-market crash. New York apartment values have since jumped as rental demand rebounds.
“Stuytown has certainly come a long way since the depths of the crisis,” said Ben Thypin, director for market analysis at real estate research firm Real Capital Analytics Inc. The $4.7 billion value considered by Fortress “reflects that resurgence in pricing.”
Read More: http://www.bloomberg.com/news/2014-05-13/fortress-said-to-be-preparing-bid-to-buy-stuyvesant-town.html
A half-empty building in Manhattan was sold at an Internet auction for within $1 million of the property’s value at the height of the boom in 2007, underscoring investors’ faith in the real estate recovery.
The six-story office tower at 246 Fifth Ave. was purchased for $19 million last week by HH Realty Equities, a New York-based owner and developer, Ariel Akkad, a principal at the firm, said in a telephone interview. The sale was conducted onAuction.com LLC, an online real estate broker.
The building’s previous owner defaulted on $14.5 million in debt that was part of a $3.6 billion commercial-mortgage backed securities deal sold during the market’s peak in 2007. The property’s value, which stood at $20 million in 2007, fell as low as $8.4 million in September 2012, according to data compiled by Bloomberg. Higher prices are a boon for bondholders, enabling them to recoup more cash on soured loans.
“If this building is back to the peak that means everything in the city is back to the peak,” said Ben Thypin, director of market analysis for Real Capital Analytics, a New York-based property research firm. “This particular property needs a lot of work.”
Read More: http://www.bloomberg.com/news/2013-12-09/manhattan-building-purchased-online-shows-boon-for-bondholders.html
A group including New York property investor Sharif El-Gamal agreed to buy the Manhattan building that houses the fashion program at the Parsons art and design school, home to television’s “Project Runway.”
El-Gamal’s Soho Properties LLC, developer of the controversial Islamic center north of lower Manhattan’s World Trade Center site, joined with Norman Sturner’s Murray Hill Properties in a deal to buy 560 Seventh Ave., the company said in an e-mailed statement. Parsons, part of the New School, said earlier this year that it would sell the building and move the fashion program to its Greenwich Village campus.
Retail buildings in the Times Square area fetch about $1,600 a square foot, compared with $677 in 2009, according to Real Capital Analytics Inc., a New York-based real estate research firm. Hotels are valued at about $700,000 a room, well above their 2006 peak of $546,000, Ben Carlos Thypin, Real Capital’s director of market analysis, said in an e-mail.
Read More: http://www.bloomberg.com/news/2013-10-09/parsons-fashion-school-home-to-be-sold-to-el-gamal-group.html
The last time Douglaston Development built something big in
Brooklyn, New York, it was a 565-unit condo project across two towers in Williamsburg that debuted in 2008, when credit markets were freezing and mortgages were hard to get. Now, Douglaston is taking a different path, building a 510-unit luxury rental tower right next door.
“The velocity at which the economic cycle moves and the fear of interest rates moving up made it very prudent to do a rental,” Jeffrey Levine, chairman of Douglaston, said in an interview. “Greed is always tempered by fear.”
About 15,300 new rental units are under construction or planned in the next two years for Brooklyn, compared with just 1,700 planned condos, according to New York brokerage MNS. Developers see rentals as a safer bet in a market where rents are climbing faster than in Manhattan and neighborhoods such as Bushwick, Greenpoint and Crown Heights are gentrifying, drawing professionals seeking more space and tree-lined streets.
. . .
Investors eager to capitalize on Brooklyn’s popularity are also buying existing buildings, which offer opportunities to collect higher rents after renovations.
Purchases of multifamily properties in the borough totaled $1.17 billion in 2012, up 23 percent from the previous year and the most since 2006, according to research firm Real Capital Analytics Inc. Sales this year are on pace to match that, with about $897 million of buildings changing hands this year.
The average deal size is $10.1 million -- 24 percent larger than in 2012, according to Ben Carlos Thypin, director of market analysis for New York-based Real Capital.
Read More: http://www.bloomberg.com/news/2013-10-04/brooklyn-condo-boom-cooled-by-manhattan-like-rents.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.