The Real Deal New York

Norway fund pushing to buy Blackstone’s $2.2B 1095 Sixth: source

Deal for tower could be one of NYC’s largest ever; oil fund just acquired stake in 601 Lex

September 17, 2014 11:15AM
By Hiten Samtani

From left: Norges' Yngve Slyngstad, 1095 Sixth Avenue and Blackstone's Jonathan Gray

From left: Norges’ Yngve Slyngstad, 1095 Sixth Avenue and Blackstone’s Jonathan Gray

UPDATED, 1:21 p.m., Sept. 17: Fresh off the acquisition of a 45 percent stake in Boston Properties’ 601 Lexington Avenue, the sovereign fund that manages Norway’s substantial oil wealth is making a play for Blackstone Group’s 1095 Sixth Avenue, according to a source familiar with the talks. A deal for the tower, expected to fetch up to $2.25 billion, would be the biggest single office asset sale in New York since the GM Building traded hands in 2008.

Norges Bank Investment Management is gunning to buy the 42-story, 1.2 million-square-foot tower, which is located between 41st and 42nd streets and overlooks Bryant Park, a source with knowledge of its moves told The Real Deal.

The fund, which is associated with nearly $14 billion in total property acquisitions over the last decade, was given a mandate in 2010 to invest up to 5 percent of its assets in real estate outside Norway, according to Real Capital Analytics.

Blackstone acquired 1095 Sixth in 2007, as part of its $39 billion purchase of Sam Zell’s Equity Office Properties Trust. The building, which is 99 percent leased, is anchored by insurance giant MetLife, and Verizon Communications recently reestablished its headquarters there. Whole Foods is also taking about 32,000 square feet at the building.

Besides its investment in 601 Lexington, Norges’ recent Manhattan investments include a $684 million stake in Boston Properties’ 7 Times Square and an investment in 470 Park Avenue South, Real Capital data show. It’s also buying into two Boston Properties’ assets in Boston: a 37-story office tower at 100 Federal Street and a 31-story office tower in the Atlantic Wharf complex.If Norges manages to acquire the tower, the move would be in line with some of these recent deals, according to Ben Thypin, Real Capital’s director of market analysis.

A spokesperson for Blackstone said the sales process had just begun. Eastdil Secured’s Doug Harmon and Adam Spies, who are marketing the property, couldn’t be reached for comment, nor could representatives for Norges.

Given the extremely low yields – typically under 5 percent — for Manhattan’s trophy towers, there are only a handful of deep-pocketed players with the stomach for such giant deals. Still, Thypin didn’t see Norges’ interest in the tower as a sign that the overall office market is hitting its peak.

“The top of the market,” he said, “operates in a parallel universe to the rest of it.”

  • marknroses

    property sold $500MM in 2005 to Sam Zell. 400% change in value with a 1.5-year downcycle period, how much higher can we go?

  • VikingMan

    Note to the Nords, if Blackstone is selling their prime assets, then it must be the top of the market.

  • richjew

    It smells like a bubble and looks like a bubble, is it a bubble?

  • moneytalks

    2 Winners and one looser. Winners: Blackstone on that huge profit and Eastdil that will make millions in commissions. Looser: Norway fund. Yes the building is producing income…but I would rather spend that on Park Avenue or something similar to 9 West 57.

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