By Eliot Brown And Keiko Morris
Blackstone Group LP has reached a deal to sell a midtown
Manhattan office tower for about $2.25 billion to a venture led by
Canadian property investor Ivanhoé Cambridge, according to people
familiar with the terms of the sale.
The deal for 1095 Ave. of the Americas, if completed, would be
the second-most-expensive sale of an individual office building in
U.S. history, trailing only the 2008 sale of the General Motors
building in Manhattan for $2.8 billion.
The sale of the 1.2 million square-foot tower shows how foreign
investors have become the dominant buyers of top-quality real
estate within major U.S. cities. In the past year, foreign
investors have snapped up stakes in glitzy office skyscrapers like
Time Warner Inc.'s headquarters and 601 Lexington Ave. in
Manhattan, the former Citicorp Center, as they scour the globe for
places to put growing pension and wealth-fund money.
In turn, money coming from countries like China and Norway has
helped push up prices to record levels in major cities, giving some
observers concern that the markets may be overheating.
Ivanhoé, the real-estate arm of public pension-fund manager
Caisse de Dépôt et Placement du Québec, has been a leading foreign
investor, buying skyscrapers in Seattle and New York in a bet that
U.S. property prices are a good long-term wager. Its partner on
those deals and the1095 Avenue of the Americas deal is Callahan
Capital Partners.
For Blackstone, the deal marks the latest move to sell the
towers it still holds as a result of its $39 billion leveraged
buyout of Sam Zell's Equity Office Properties Trust in 2007, and
earlier acquisitions in 2006 and 2005. While it sold many
properties in cities like Los Angeles and Washington at the time of
the buyout, it held on to towers scattered around the U.S. for
years, through the downturn and early years of the recovery.
As prices have risen, Blackstone has picked up the sales.
Earlier this year, the New York private-equity firm sold a set
of Boston skyscrapers for more than $2 billion to Canadian investor
Oxford Properties Group and the asset-management arm of J.P. Morgan
Chase & Co., and it recently sold a set of Silicon Valley
office buildings to Google Inc.
At 1095 Ave. of the Americas, the deal ends years of
redevelopment for a building that was once occupied by Verizon Inc.
But Blackstone redeveloped the building, stripping it down to its
steel and cladding it with a shiny green glass that stands out on
the edge of Bryant Park.
At the same time, it embarked on a major redevelopment of the
retail, adding new space in distinctive clear glass boxes to which
it lured tenants like Whole Foods and Asics. With the building now
about 95% leased, earlier this year it tapped real-estate firm
Eastdil Secured LLC to market the building, attracting numerous
buyers from overseas and the U.S.
For Ivanhoé and Callahan, the deal adds to their growing midtown
Manhattan portfolio. Among others, the companies control 1411
Broadway and 1211 Ave. of the Americas, home of The Wall Street
Journal and News Corp.
Write to Eliot Brown at eliot.brown@wsj.com
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