TIAA-CREF Buys 21 Penn, 2 Herald Square in Midtown Manhattan
- Nov 20, 2014
By Scott Baltic, Contributing Editor
The buying spree by TIAA-CREF is so fast and furious lately that the latest deal was actually two of them. The fund announced on Wednesday that it had purchased two New York buildings: 21 Penn Plaza, near Hudson Yards, and 2 Herald Square (a/k/a 1328 Broadway), a few blocks east.
The latter building was purchased in a joint venture with Norges Bank Investment Management, manager of the Norwegian Government Pension Fund Global, which took a 49.9 percent interest. TIAA-CREF did not release a price as to either building, but NBIM stated that its contribution on 2 Herald Square was $182 million, valuing the ground at $365 million. The asset is unencumbered by debt, and no financing was involved in the transaction, according to NBIM.
Both transactions closed Tuesday, a TIAA-CREF spokesperson told Commercial Property Executive.
2 Herald Square is a 365,000-square-foot, 12-story office building with three floors of retail space, at Sixth Avenue between 34th and 35th streets. It’s owned by Sitt Asset Management on a long-term ground lease; the seller of the fee position was SL Green.
TIAA-CREF acquired a 50.1 percent interest and will manage the building on behalf of the partnership. The ground floor is leased by retail tenants H&M and Victoria’s Secret.
“We are continually seeking core assets with durable income streams and high occupancy. This location is sought after by both retail and office tenants,” said Suzan Amato, managing director of managed accounts and strategic joint ventures for TIAA-CREF.
The sellers of 21 Penn Plaza were Savanna and the Feil Organization, which had purchased the property in a joint venture in 2011. The building is on the southeast corner of West 31st Street and 9th Avenue.
“The property’s location is exceptional, as it’s located directly across the street from Moynihan Station, which is currently undergoing a significant redevelopment, is one block from the Penn Station transportation hub and is within the immediate vicinity of the Manhattan West and Hudson Yards redevelopment projects, which will transform this location into a vibrant, pedestrian-friendly, transit-oriented, mixed-use live-work-play environment.” Henry Dong, senior director, global real estate for TIAA-CREF, told CPE.
21 Penn Plaza’s occupancy is 98 percent, after Savanna and the Feil Organization reportedly invested close to $5 million in upgrades, including new lobbies, entrances and mechanical systems, and were able to lease more than 225,000 square feet of space to re-stabilize the property. Office tenants include Saks & Co., Langan Engineering and Amtrak, and retail tenants include Avon, Dunkin’ Donuts and H&R Block.
Massey Knakal Realty Services marketed 21 Penn Plaza on behalf of the sellers.