Asia – Top NYC Office Investor of 2016

Foreign Capital – Foreign Confidence

The New York City commercial market remained active and attractive, through a year of new political and economic uncertainty. At the beginning of last year, it was forecast that NYC markets would attract even more foreign investors. So with 2016 now in the bag, we had a look at PropertyShark and Yardi Matrix data to see how much clout foreign capital had over the top commercial office sales closed and recorded between January and December of 2016. We did not leave out partial interest purchases or building portfolios.

NYC’s Top Office Foreign Investors in 2016

We compiled a list of top 20 NYC office sales of 2016, which you can review below, in full. Over half of these sales involved foreign capital, either partially or exclusively.

China- and Canada-based investors confidently placed capital in billion dollar assets. In all, foreign investors accounted for 11 of the 16 deals of over $400 million each, last year. Asian buyers alone accounted for 7 of them. Let’s take a look at what they were shopping for:

1. 1285-1297 Avenue of the Americas – $1,649,000,000

6 Ave AXA Tower (PropertyShark)

RXR Realty partnered with Brooklyn’s “one man buying machine” David Werner and Beijing-based China Life Insurance Group to acquire the massive office tower.

China’s biggest life insurer has made other sizeable real estate investments in the U.S., but this is its first major Manhattan deal. The pricy, yet undisclosed, stake in the 6^th Avenue office tower is part of the firm’s stated intention to significantly increase its overseas investments.

2. 1095 Avenue of the Americas – $1,152,970,000

1095 6 Ave (PropertyShark)

Real Summit Investment, the RE investment branch of Hong Kong Monetary Authority’s exchange fund (HKMA) bought a 49% stake in the building. The sellers, Canadian investment firm Ivanhoe Cambridge and its long term Chicago-based venture partner, retain majority stake. The partnership bought the 41-story building for $2.2 billion in 2015.

Since Brexit has sent more investors across the ocean, the Hong Kong-based fund may take more opportunities to place capital in the NYC market. HKMA controls the value of the Hong Kong dollar versus U.S. dollar by holding U.S. dollar denominated assets in reserve.

3. & 4. 1221 Avenue of the Americas & One New York Plaza – $1,730,000,000

Two partial stake deals by the same buyer both entered our Top 20. The sizable investment also marks the company’s first venture into the U.S. market, according to Mingtiandi.

The Canada Pension Plan Investment Board sold its 45% stake in the 6^th Avenue tower to Chinese sovereign wealth fund China Investment Corporation, for $1.03 billion. CPPIB had acquired the interest for $576 million from SL Green Realty, in 2010. CIC made this acquisition in December through Dallas-based investment manager INVESCO.

The Rockefeller Group retains its 55% majority stake and continues to manage the property at 1221 6th Avenue.

But CIC’s 2016 spending spree began in May, when the Corporation paid $700 million for the minority stake in the office building at 1 New York Plaza. Toronto-based Brookfield Property Partners retains its 51% majority interest in the 50-story Financial District tower and continues to handle leasing and management.

5. 7 West 34 Street – $561,000,000

This 1901 Penn Plaza building got a much needed renovation in 2014. Vornado Realty Trust contracted Moed de Armas & Shannon Architects to convert it into a fully modernized office building, dedicated to the tenant that almost fully occupies the 477k SF space – retailer giant Amazon.

In 2016, Vornado decided to market a 47% minority stake in the property. The buyer was Korea Post Savings, a division of South Korea’s state-run postal service. As the main tenant occupies the space under a 16 year lease, the Korean investor expects stable rental incomes from this asset.

Otherwise, Korea Post declared that this will be its last North American equity investment for now. It is looking to European markets, where prices have not yet returned to pre-crisis levels.

6. 850 3^rd Avenue – $463,000,000

This Turtle Bay deal is the second joint venture of Murray Hill Properties and Chinese conglomerate HNA Property Holdings – the New York-based commercial real estate arm of HNA Group. The partners bought this building from San Francisco-based Shorenstein Properties.

MHP is the operating partner of the venture, while HNA retains majority, as equity owner and plans to establish U.S. headquarters in the 21-story, 600k SF office building. At the time of the sale, Media firm Discovery Communications was the largest tenant, occupying over 165k SF.

7. 885 3^rd Avenue – $453,000,000

The third U.S.-foreign partnership asset on our list is the iconic “Lipstick Building.” NYC-based Ceruzzi Properties partnered with Shanghai Municipal Investment. SMI-USA is the American branch of the Shanghai-based corporation.
The partnership purchased a 67-year lease of the ground beneath the building, from major NYC property owner SL Green Realty.

Back in 2010, SL Green paid $39.3 million for its 45% interest in the leased fee (ground) of the property.

Quick buyers roundup:

See the complete list of sales in the table below. Read more on the Top 20 NYC Office Sales of 2016.