Investors - JUNE 26, 2014

Canadian pension funds buy Manhattan office properties

by Andrea Waitrovich

Two Canadian pension funds have invested in two Manhattan office assets in separate deals.

The Canada Pension Plan Investment Board has invested an additional $108 million to increase its ownership interest in One Park Ave. to 45 percent through a joint venture with Vornado Realty Trust. CPPIB previously held an indirect stake of approximately 11 percent through its investment in the Vornado Capital Partners Parallel fund. The parties valued the property at $560 million, including the assumption of $250 million of debt.

“Our increased stake in One Park Ave. aligns with our U.S. office strategy to acquire high quality assets in key markets,” says Peter Ballon, vice president and head of real estate investments – Americas, CPPIB, in a statement. “The property’s prime location and strong tenant base make this an attractive investment and diversify our holdings in Manhattan. We look forward to further expanding our relationship with Vornado as we continue to build our office portfolio in the United States.”

Vornado, which acquired the asset in 2011 for $426.8 million, will continue to manage the property.

One Park Ave. is a 20-story, 941,000-square-foot class A office building located on Park Avenue between 32nd and 33rd streets in the Midtown South submarket. One Park Ave. was built in 1925. It is 89.6 percent occupied. Major tenants include New York University, Coty US and CHF Industries.

Some other assets CPPIB owns in New York City are the 37-story office building at 10 East 53rd St., for which the pension fund, with its partner SL Green Realty Corp., paid $257 million in 2012; CPPIB also acquired and sold the 24-story 100 Broadway; and acquired the eight-story 655 Fifth Ave. with joint venture partners.

Two miles away in the Hudson Square neighborhood of Midtown South, Ivanhoé Cambridge (an affiliate of the Caisse de dépôt et placement du Québec) and its partner Callahan Capital Properties acquired a 49 percent interest in 330 Hudson for $150 million through a joint venture with affiliates of Beacon Capital Partners.

“330 Hudson is a leading example of the creative work environment that is increasingly desirable to the growing technology and media industries in Hudson Square, which is one of New York’s most promising urban live/work neighborhoods,” says Adam Adamakakis, executive vice president, U.S. investments, at Ivanhoé Cambridge, in a statement.

330 Hudson is a 16-story, 467,000-square-foot class A office building that has been entirely transformed through its recently completed redevelopment that included the addition of eight new column-free tower floors on a fully renovated historic, stone-and-brick base building.

This transaction is Ivanhoé Cambridge’s fifth acquisition made with Callahan, bringing the partners’ U.S. office platform investments to more than $2.1 billion.

Ivanhoé Cambridge’s New York City activity includes the acquisition of the News Corp. Building with Callahan in 2013 for the sales price of $1.8 billion; the 157-unit apartment Prospect Tower with its joint venture partners in 2013 for a sales price of $99.2 million; and the World Apparel Center at 1411 Broadway. 

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