The Real Deal New York

The 10 biggest NYC investment sales of 2016

Billion-dollar minority stakes and Midtown trophy towers dominate
By Mark Maurer | Twitter_logo_blue copy December 29, 2016 07:00AM

Clockwise from left: Olayan Group’s Hutham Olayan, RXR Realty’s Scott Rechler, CalPERS’ Marcie Frost, 550 Madison Avenue, 787 Seventh Avenue and 388-390 Greenwich Street

Manhattan skyscrapers remain the ultimate savings account for the global investment community. Whether the lower end of the investment sales market is hot or not, trophy towers generally see a flurry of big-ticket deals. From that perspective, 2016 was no exception, though there were fewer billion-dollar deals and the emphasis was on partial-stake sales.

In fact, 12 of the top 20 investment sales were partial-stake deals, according to an analysis by The Real Deal. The market experienced déjà vu, with sales involving many of the same trophy buildings from 2014 and 2015. All the top 10 deals were office towers – no Waldorf Astorias, Stuy Towns or World Trade Center malls in the bunch. The year’s largest multifamily deal – Blackstone Group’s $620 million purchase of Kips Bay Court – came in 12th.

Overall, though, there was a definite slowdown in the city’s investment sales market. New York saw $44.4 billion in investment sales-deals over the first three quarters of 2016, a 21.6 percent year-over-year drop from $56.6 billion, according to Cushman & Wakefield data. Manhattan had $30.2 billion in investment sales over that period, a 29.4 percent year-over-year drop from $42.8 billion.

Last year was credited with being the biggest year on record, with $74.5 billion in investment sales. Dollar volume is expected to land somewhere in the $50 billion range by this year’s end.

See which buildings made the top 10 list this year. (Note: The list is based on data from The Real Deal, CoStar and Real Capital Analytics. The ranking is based on all closed 2016 sales of partial or complete stakes. In-contract sales that have yet to close were excluded.)

AddressPrice% InterestBuyer SellerBrokerage
787 Seventh Avenue $1.9B 100% CalPERS and CommonWealth PartnersAXA FinancialEastdil Secured
388-390 Greenwich Street$1.8B100%CitigroupSL Green Realty n/a
1285 Sixth Avenue $1.7B 100%RXR Realty, David Werner Real Estate and China LifeAXA Financial and JPMorgan ChaseEastdil Secured
550 Madison Avenue $1.4B 100% Olayan Group and Chelsfield Chetrit Group and Clipper EquityEastdil Secured (seller); JLL (buyer)
1095 Sixth Avenue $1.2B49%Hong Kong Monetary AuthorityIvanhoe Cambridge and Callahan Capital Partners Eastdil Secured
11 Madison Avenue $1.04B 40%PGIM Real EstateSL Green Realty CBRE
1221 Sixth Avenue $1.03B45%China Investment Corporation (Invesco as middleman) Canada Pension Plan Investment Board Eastdil Secured
10 Hudson Yards$946M44% Allianz SECoachEastdil Secured
1211 Sixth Avenue $913M 49%Ivanhoe Cambridge and Callahan Capital PartnersBeacon Capital PartnersEastdil Secured
5 Times Square$800M 50% RXR RealtyDavid Werner Real Estate Eastdil Secured

1. 787 Seventh Avenue, $1.9 billion
Buyer: CalPERS and CommonWealth Partners
Seller: AXA Financial
Brokerage: Eastdil Secured
The year’s largest building sale went under contract in late 2015, and no deal could top it. California pension fund CalPERS and private equity firm CommonWealth Partners closed in January on the $1.9 billion purchase of one of two Midtown behemoths sitting on a four-acre site. The 51-story, 1.7 million-square-foot tower is almost fully occupied.

2. 388-390 Greenwich Street, $1.8 billion
Buyer: Citigroup
Seller: SL Green Realty
Brokerage: N/A
If 388-390 Greenwich Street seems familiar, it’s because SL Green’s $783 million purchase of Ivanhoe Cambridge’s stake occurred just two years ago. This time, Citigroup exercised an option to buy the two buildings back after selling them to SL Green Realty and Ivanhoe Cambridge in 2007 for $1.6 billion. Citigroup fully occupies both the 39-story, 1.6 million-square-foot tower at 388 Greenwich and the nine-story, 760,000-square-foot building next door at 390 Greenwich.

3. 1285 Sixth Avenue, $1.7 billion
Buyer: RXR Realty, David Werner Real Estate and China Life
Seller: AXA Financial and JPMorgan Chase
Brokerage: Eastdil Secured
French insurer AXA sold both 787 Seventh and also this 39-story, 1.7 million-square-foot Sixth Avenue tower next door (with JPMorgan Chase). Scott Rechler’s RXR Realty brought in two equity partners — secretive Brooklyn-based investor David Werner and Beijing-based insurer China Life – to make the deal happen. The deal closed in May, a few months after 787 Seventh. Swiss Bank UBS AG anchors the fully-occupied building. Its lease, set to expire in 2020, was recently extended to 2032. AIG financed the RXR-led acquisition with a $1.03 billion loan.

4. 550 Madison Avenue, $1.4 billion
Buyer: Olayan Group and Chelsfield
Seller: Chetrit Group and Clipper Equity
Brokerage: Eastdil Secured (seller); JLL (buyer)
The proposed Sony Building residential conversion, once representative of the city’s luxury boom, came to symbolize something else in April. The owners, Joseph Chetrit’s Chetrit Group and David Bistricer’s Clipper Equity, pulled the plug on a 96-unit, Robert A.M. Stern-designed condominium conversion of the upper floors of the iconic 37-story property at 550 Madison Avenue. When Olayan America, the U.S. investment arm of Olayan Group, entered contract in April, construction had already begun on the 170-key New York Masterpiece Hotel. The abandoned project was seen as a sign of a softening luxury market. Olayan secured a $570 million bridge loan for the purchase and hired a CBRE team to market 850,000 square feet of office for lease. Olayan’s minority partner on the purchase was Chelsfield, an asset manager active in Europe and Asia.

5. 1095 Sixth Avenue, $1.2 billion (partial stake)
Buyer: Hong Kong Monetary Authority
Seller: Ivanhoe Cambridge and Callahan Capital Partners
Brokerage: Eastdil Secured
In the largest minority stake deal of the year, an investment fund controlled by Hong Kong’s central bank took a 49 percent stake in the 1.2 million-square-foot Salesforce Tower. Salesforce began moving into its new five-floor spread there in November. The minority stake is valued at $1.15 billion and the building valued at $2.35 billion. Less than two years ago, Canadian investment firm Ivanhoe Cambridge and its U.S. investment partner Callahan Capital Partners bought the tower from Blackstone Group for $2.2 billion in what was one of 2015’s priciest trades.

6. 11 Madison Avenue, $1.04 billion (partial stake)
Buyer: PGIM Real Estate
Seller: SL Green Realty
Brokerage: CBRE
The trophy Art Deco tower 11 Madison last made this list in 2015 when SL Green bought it from the Sapir Organization and CIM Group for $2.6 billion ($2.3 billion plus $300 million in lease-stipulated improvements). In August of this year, PGIM, formerly known as Prudential Real Estate Investors, took a 40 percent stake valued at $1.04 billion, including the debt. PGIM contributed $480 million in equity for the stake.

7. 1221 Sixth Avenue, $1.03 billion (partial stake)
Buyer: China Investment Corporation (Invesco as middleman)
Seller: Canada Pension Plan Investment Board
Brokerage: Eastdil Secured

In December, China Investment Corporation, a Chinese sovereign wealth fund, closed on a 45 percent stake in the former McGraw-Hill Building at 1221 Sixth Avenue. CIC bought the stake through Invesco, in a deal valued at $1.03 billion. The stake sale values the 50-story, 2.6 million-square-foot tower at about $2.29 billion. Rockefeller Group will continue to manage the tower and retain its 55 percent interest. Canada Pension Plan (CPP) had purchased the stake in 2010 from SL Green Realty for $576 million, valuing the property at $1.28 billion at the time. Invesco was among the firms eyeing the stake back when CPP began shopping it around in April.

8. 10 Hudson Yards, $946 million (partial stake)
Buyer: Allianz SE
Seller: Coach
Brokerage: Eastdil Secured
The newest building on the list, 10 Hudson Yards, welcomed a new minority owner in August. German insurer Allianz SE bought a 44 percent stake in the 52-story, 1.8 million-square-foot office skyscraper from Coach, which had initially acquired a condo for its corporate headquarters there. The stake, including debt, is valued at $946 million. The deal made the tower worth $2.15 billion. This was the first property in the Related Companies and Oxford Properties Group’s Far West Side megadevelopment to open, earlier this year.

9. 1211 Sixth Avenue, $913 million (partial stake)
Buyer: Ivanhoe Cambridge and Callahan Capital Partners
Seller: Beacon Capital Partners
Brokerage: Eastdil Secured
In June, Ivanhoe and Callahan Capital exercised an option in their ownership agreement to buy out minority stakeholder Beacon Capital Partners’ 49-percent interest in the 2 million-square-foot tower. In 2013, they bought a 51 percent stake in the tower for $850 million, in a deal that valued the property at $1.75 billion. The 49-percent stake, at the time they bought it from Beacon, was valued at $913 million, records show. News Corp and 21st Century Fox, which are both tenants there, briefly considered moving to 2 World Trade Center but ultimately renewed their leases.

10. 5 Times Square, $800 million (partial stake)
Buyer: RXR Realty
Seller: David Werner Real Estate
Brokerage: Eastdil Secured
Early this year, RXR took a controlling interest in 5 Times Square with the $800 million purchase of a 50 percent joint-venture leasehold in the office tower, which is home to Ernst & Young. A group of investors led by David Werner had bought the 1 million-square-foot tower in full from AVR Realty Company for $1.5 billion in 2014. RXR provided a $150 million mezzanine loan to Werner and partners at the time of the 2014 deal.

See 2015’s biggest investment sales deals here.