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October 16, 2013

Ivanhoé Buys 51% Interest in NYC’s 1211 Avenue of the Americas

By Gail Kalinoski, Contributing Editor

1211 Avenue of the Americas_NY_US_3256

Ivanhoe Cambridge, the real estate arm of one of Canada’s largest pension funds, continues to expand its U.S. office holdings with the acquisition of the majority stake in 1211 Avenue of the Americas in Manhattan for $850 million.

The firm purchased the 51 percent managing member interest from an affiliate of Beacon Capital Partners, which had owned the 45-story Class A trophy asset located on “Corporate Row” near Rockefeller Center between 47th and 48th streets since 2006. News America Inc., parent of The Wall Street Journal and Fox News, occupies about half the 2 million square feet of the office tower. Other tenants are Ropes & Gray L.L.P. and Axis Reinsurance.

Adam Adamakakis, executive vice president, investments, said the iconic building is about 90 percent occupied with 170,000 square feet of contiguous space available on the upper floors, 41 to 44.

“We like the position that we’re in with the vacancy on the top floors. That’s one of the features that attracted us to the property,” Adamakakis told Commercial Property Executive.

The transaction brings Ivanhoe Cambridge’s office and multi-family holdings in Manhattan to more than $3 billion. This is the fourth Manhattan office building in which the firm owns stakes. In November, 2012, it acquired 49.9 percent ownership interest in 1411 Broadway, a 40-story, Class A office tower just south of Times Square for more than $360 million.  It also owns 43.1 percent interest in 1745 Broadway, a 636,60­0-square-foot office building, and a 49.4 percent interest in 388-390 Greenwich St., a 2.6 million-square-foot office building.

“We will continue to look at the New York City market,” Adamakakis said. “It’s a market we believe strongly in. We believe there’s been good absorption and modest rent growth.”

Adamakakis also noted that New York is “fairly restricted in terms of new supply” and cited the high costs of building in Manhattan.  He said Ivanhoe Cambridge got 1211 Avenue of the Americas at a “discount” compared to new construction.

Affiliates of Beacon Capital Partners, a Boston private equity firm, will continue to own the minority stake in the building, Adamakakis said.

“We like that asset. We like the relationship we have with Callahan. We’re very excited about the Beacon partnership as well,” he concluded.