International Investors Buy Landmark Manhattan Property for $1.4 Billion

International Investors Buy Landmark Manhattan Property for $1.4 Billion
Written by:
Rachel McCormack
3rd June 2013

Two pricey New York real estate deals were signed last week, highlighting growing property investment demand in the Big Apple as foreign and domestic buyers seek to cash in on rising rents and values in the Manhattan market. As The Financial Times reported on Monday, June 3, a group of investors, including a prominent Chinese real estate tycoon, had purchased a 40 percent stake in the General Motors Building, while a local private equity firm had agreed to sell a neighbouring office tower in what would be the largest deal for a single US building since 2010.

**Zhang, Safra Buy Stake in GM Building as Manhattan Property Values Rise**
Xin Zhang, the billionaire founder and chief executive of Beijing-based real estate developer Soho China (HKG:0410), and M. Safra & Co, the New York-based investment firm of Brazil’s Safra banking empire, had bought the General Motors Building stake through an entity called The Sungate Trust, the FT wrote. The buyers had teamed up in a $1.4 billion property investment, which valued the 50-storey skyscraper at approximately $3.4 billion, likely making it the most valuable office building in the US.

The GM Building, which has 150,000 square feet of prime retail and office space and occupies a full block between Fifth and Madison Avenues, has tenants that include cosmetics maker Estée Lauder, law firm Weil, Gotshal and Manges, as well as holding company Icahn Enterprises. Sellers of the GM Building stake were Goldman Sachs Group’s US Real Estate Opportunities Fund and Dubai-based private equity firm Meraas Capital. Boston Properties (NYSE:BXP) holds the remaining 60 percent stake in the GM Building.

The sale of the GM Building stake has come at a time when yield-starved investors have been paying up for top-quality Manhattan office properties, lifting values, rents and occupancy rates in the area. According to Real Capital Analytics data, prices of office buildings in the area last month were 51 percent higher than a year earlier, having regained much of what they lost in the financial crisis.

**Manhattan’s Commercial Property Appeal Increasing**
In another major deal highlighting growing demand for commercial property in Manhattan, US-based private equity firm Carlyle Group LP has agreed to sell its 600,000 square feet 650 Madison Avenue office and retail block to a joint venture between New York-based retail developer Crown Acquisitions and investment firm Highgate Holdings, for $1.3 billion — almost twice what it paid for it five years ago.

!m[The Carlyle share price closed 1.12 percent lower at $29.16 in New York on Friday, May 31.](/uploads/story/2683/thumbs/pic1_inline.png)
Carlyle led a group of investors that bought the 27-storey glass-fronted skyscraper for $680 million in 2008, before refurbishing and leasing the property. When completed, this latest purchase of the tower will mark be the biggest sale of a single building in the US since Google bought the 2.9 million square feet 111 Eighth Avenue in December 2010 for $1.8 billion.
**As of 15:59 HKT on June 3 the Soho China share price in Hong Kong was up 0.30 percent at HK$6.60.**
**The Carlyle share price closed 1.12 percent lower at $29.16 in New York on Friday, May 31.**

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