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For Ivanhoe, Stuy Town deal was years in the making

Blackstone’s Canadian partner considered buying housing complex before

Ivanhoe
From left: Daniel Fournier, Sylvain Fortier and Stuyvesant Town

On Tuesday morning, more than a dozen politicians came together with representatives of the Blackstone Group to formally announce the $5.3 billion deal for Stuyvesant Town-Peter Cooper Village. Speeches were made, backs were patted, and Blackstone was celebrated as a savior of the complex’ affordable units.

Conspicuously absent were representatives from Ivanhoe Cambridge, the Canadian investment giant that is equal partners with Blackstone on the deal. Ivanhoe Cambridge‘s low profile over the past few days belies its financial clout. In the Stuy Town deal, it is investing 50 percent of the equity, or $1.3 billion, with Blackstone coughing up another $1.3 billion. And the Montreal-based company says it has invested in every Blackstone real estate fund to-date, meaning its real financial stake in the deal could be even higher.

“We love New York and have loved it for a long time,” Sylvain Fortier, the company’s chief global investment officer, told The Real Deal in an interview Tuesday. “We feel we were ready for this opportunity because of our experience.”

Daniel Fournier, the company’s CEO and a former wide receiver for Canadian football team Ottawa Rough Riders, added that he looked at Stuy Town at least twice before and has done “at least four or five years of homework” on the asset.

Ivanhoe Cambridge last considered buying the complex three years ago. But it balked at the tangle of claims on the foreclosed property, which wasn’t being marketed at the time. “It wasn’t as clear to me what situation with all various lenders was,” Fortier recalled, adding that he thinks the “risk level” is a lot lower now.

“What we feel here what makes it really interesting for us is the agreement with the city,” Fortier said. “As you know the previous ownership created lot of confrontation with the tenant association, and we’re not about that.”

Ivanhoe Cambridge – the real estate investment arm of Quebec’s public pension fund manager La Caisse de Depot et Placement du Quebec (the Caisse for short) – and its predecessor SITQ haven been active players in New York for two decades. Over the past five years, the firm has done more than $5 billion in Manhattan deals — more than real estate giants like Related Companies, Brookfield Properties or American Realty Capital. No other pension fund manager has spent nearly as much.

Ivanhoe Cambridge tends to partner with local real estate companies on its deals and prefers to operate in the background. In this sense, the Stuy Town deal is typical.

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The firm is well-known in investment circles as a buyer of trophy office properties, in partnership with Chicago-based Callahan Capital Partners. In October 2013, the partners bought a stake in 1211 Sixth Avenue for $892 million. In June 2014, they bought a stake in Beacon Capital Partners’ 330 Hudson Street, before making their biggest splash to date in 2015 with the purchase of 3 Bryant Park for $2.2 billion.

But the company has also been an active investor in Manhattan multifamily buildings, dishing out around $1 billion in partnership with Ofer Yardeni’s Stonehenge Partners since 2007, buying buildings like 100 East 20th Street and 330 East 63rd Street.

“Our team is very involved in New York market, and we’ve done very well there,” Fournier said, adding that the multifamily investments with Stonehenge in many ways prepared the firm for the Stuy Town deal.

“We are the subsidiary of a pension fund that represents close to 8 million people and are looking for stable returns,” Fortier said, explaining that the Stuy Town deal meets that criterion. Like Blackstone, Ivanhoe Cambridge pledged to hold the property for a long time, targeting stable returns.

The company, which holds about $50 billion in assets, targets investment returns of around 9 percent across its portfolio, according to a spokesperson, and generally invests in a mix of core, value-add and opportunistic deals.

Ivanhoe Cambridge’s relationship with Blackstone goes back decades. Last year, the two firms partnered to buy a major stake in French REIT Gecina, and earlier this year Blackstone sold 3 Bryant Park to the Canadian company.

Fournier and Fortier couldn’t definitively say who first approached whom about a possible Stuy Town purchase, but disclosed that the two firms had been discussing the deal for two or three months.

“To be honest, we’ve been talking to Blackstone on and off on a lot of things,” Fortier said.

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