Normandy, NTT Urban Form Strategic Partnership

This move guarantees both firms investment activity growth in the office and mixed-use sectors in various urban and transit-oriented areas in core markets, including New York and D.C.
Finn Wentworth, co-founder and partner, Normandy
Finn Wentworth, co-founder and partner, Normandy

Building on a successful history of transactions together, Normandy Real Estate Partners and NTT Urban Development Corp. recently took their relationship to the next level by entering into a strategic partnership. Per terms of the deal, NTTUD, the real estate division of Tokyo, Japan-based Nippon Telegraph and Telephone Corp., acquired a 15 percent common equity interest in Normandy’s management platform.

The new partnership fortifies both Normandy and NTTUD for the expansion of investment activities in the office and mixed-use sectors in various urban and transit-oriented areas of Normandy’s core markets: New York, Boston and Washington, D.C.

“Today’s news puts Normandy in a position to continue delivering superior results for all of our investors and partners,” Finn Wentworth, co-founder and partner, Normandy Real Estate Partners, said in a prepared statement. “Japanese investors are expected to be a growing and important source of equity capital targeting real estate investment in the U.S. Our affiliation with NTTUD will leave us strategically well positioned for future growth.”

Japan’s outbound investment in real estate totaled $3 billion in 2016, and most of it targeted the U.S., according to research by commercial real estate services firm CBRE Group. “We expect Japan to step-up overseas investment in the year ahead as they are coming off a low base,” Robert Fong, director of research with CBRE, said in prepared remarks.

The new arrangement between Normandy and NTTUD comes four years after NTTUD made its first foray into the U.S. with its co-investment in the $54.5 million acquisition of the 138,000-square-foot office tower at 125 W. 25th St. in New York, through Normandy Real Estate Fund III. Normandy and NTTUD have since co-invested on five additional endeavors—and sold 125 W. 25th to Swiss pension fund AFIAA for $150 million in December 2016.

Normandy’s sale of an interest to NTTUD will have no impact on leadership at the real estate operator and fund manager. Wentworth and his co-founders and partners David Welsh and Jeff Gronning will still control the company, which will see no interruption in the raising of commingled real estate funds and joint ventures.