Canada’s two largest pension funds are expanding their holdings of New York real estate, announcing separate deals today to buy stakes in Manhattan office towers.
Ivanhoe Cambridge Inc., the Montreal-based real estate unit of pension fund Caisse de depot et Placement du Quebec, agreed with its joint-venture partner to acquire a 49 percent interest in 330 Hudson St. for about $150 million, according to a statement today. Canada Pension Plan Investment Board, the country’s largest pension fund, is taking a 45 percent stake in 1 Park Ave., controlled by Vornado Realty Trust. (VNO:US)
Canadians were the biggest foreign buyers of commercial property in America last year and the second-largest in New York, behind the Chinese, according to Real Capital Analytics Inc. Ivanhoe Cambridge has made five U.S. office deals through its partnership with Callahan Capital Properties as it seeks to boost its real estate investments.
“Canada has tremendous financial resources with which to invest and they’re some of the largest sovereigns in the world,” Doug Harmon, a broker with Eastdil Secured LLC who worked on both deals, said in a telephone interview. “They’ve had a big head start as far as investable dollars and making friends and relations in New York.”
Ivanhoe Cambridge’s Manhattan deals include an October agreement for a 51 percent stake in the News Corp. building at 1211 Avenue of the Americas. The transaction valued the tower at $1.7 billion.
The company’s investment in 330 Hudson, located in the in-demand midtown south neighborhood, values the 16-story building at $306 million. Beacon Capital Partners, represented by Eastdil in the transaction, recently led a redevelopment of the 467,000-square-foot (43,400-square-meter) tower, including the addition of eight column-free floors.
Ivanhoe Cambridge was interested in the property because of its potential to lure tenants from the technology, media and information industries, Adam Adamakakis, Ivanhoe Cambridge’s executive vice president for U.S. investments, said in a telephone interview. Those companies have been New York’s most active office renters in recent years.
“We like the neighborhood, we like the asset and we like tenants that it attracts,” Adamakakis said.
Manhattan has about 400 million square feet of office space, roughly equal to the office space in all of Canada, helping to lure the nation’s investors, Adamakakis said.
Through its partnership with Callahan, Ivanhoe Cambridge is looking to invest in nine U.S. markets, including Washington, D.C., San Francisco and Los Angeles, he said.
Toronto-based Canada Pension invested $108 million to boost its stake in 1 Park Ave., a 925,000-square-foot property east of Herald Square, to 45 percent, the company said in its statement today. It previously held an indirect interest of about 11 percent through an investment in a Vornado fund. Eastdil’s Harmon and Adam Spies were the brokers on the deal for Vornado.
The investors value the building at $560 million, including the assumption of $250 million in debt. New York-based Vornado bought a 95 percent stake in the tower in 2011, which valued it at $427 million.
“For us, and perhaps other institutional investors, the strength of New York and the resilience of New York in the long term is very attractive,” Peter Ballon, vice president and head of real estate investments in the Americas for Canada Pension, said in a phone interview. “The real estate conditions right now in terms of fundamentals are very strong and we believe that it’s a market that’s going to be around for the long run.”
Canada Pension’s most recent New York acquisition was in early 2012, when it bought a stake in 10 E. 53rd St. The majority owner of the 388,000-square-foot tower is SL Green Realty Corp., Manhattan’s largest office landlord.
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