The Real Deal New York

Mitsui Fudosan takes 90% stake in NYC’s most expensive office tower

BlackRock will anchor the $4B office tower
September 01, 2017 09:50AM

50 Hudson Yards

Japanese developer Mitsui Fudosan is taking a 90 percent stake in Related Companies’ 50 Hudson Yards — the $4 billion tower that’s the most expensive office development in the city’s history.

The investment is the company’s largest stake in a single building, Reuters reported. A subsidiary of Tokyo-based Mitsui Group, Mitsui Fudosan also owns a majority stake in 55 Hudson Yards, which it acquired for $259 million in late 2014.

The 58-story tower at 50 Hudson Yards, developed by Related and Oxford Properties Group, will have 2.79 million square feet of retail and office space, and will be one of the largest office buildings in the area when it’s completed in 2022. Plans filed with the Industrial Development Agency from earlier this year show all-in development costs for the 985-foot tower will be $3.94 billion — or $1,400 per square foot.

In May, BlackRock disclosed it will pay $1.25 billion for a 20-year lease at the tower. The asset manager will occupy 847,000 square feet.  BlackRock is paying $74 a square foot over the life of the lease, but just $60 a square foot over the first five years.

Sources told Reuters that the asset manager will also have to cough up around $30 per square foot in annual operating expenses and property taxes. The lease starts in 2023.

Mitsui Fudosan’s footprint in New York City includes its headquarters at 1251 Sixth Avenue, as well as 55 Hudson Yards, a 1.3 million-square-foot office building and 527 Madison Avenue, a boutique office building with 240,000 square feet. It also developed 160 Madison Avenue, a 41-story rental building.

In May, Related was in advanced talks to sew up $2.5 billion in financing for the office tower, including $700 million in equity and a $1.8 billion senior loan from a syndicate of banks. Bank of China, Deutsche Bank and Wells Fargo are putting together a five-year mortgage for the tower, The Real Deal reported, citing sources. At the time, sources said a foreign institutional investor would provide the additional equity, with two sources naming Mitsui Fudosan. [Reuters] E.B. Solomont