Italian, Irish, and Israeli Investors Buy Into N.Y.
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“We’ll have Manhattan, the Bronx, and Staten Island, too” is the first chorus of the show tune “Manhattan,”written by Richard Rodgers and Lorenz Hart in 1925. Eighty years later, foreign investors are seeking investment opportunities all over New York City.
Investors from the three “I” countries – Italy, Ireland, and Israel – are especially interested in owning a piece of the Big Apple.
Last month, the Italy-based Michelangelo Fund bought a 27.7% share in German-based TMW Property Fund.TMW owns a 75% interest in the famed Chrysler Building. New Yorkbased Tishman Speyer Properties, which purchased the property, owns the remaining 25% of the tower.
The president and chief executive of Anglo Irish Bank’s North American operations, Tony Campbell, said, “Our bank and our clients from Ireland want to invest in properties in New York City, Chicago, and Boston.” In September 2004, the bank paid $212 million to the U.N. Pension Plan for the 373,000-square-foot office tower at 222 E. 41st St. The tower was completed in 2002 by Tishman Speyer on the former site of a parking lot.
“Earlier in the year, we acted as the advisers and financed the acquisition of the Rhinelander Mansion for our client, Sloane Capital,” Mr. Campbell said. Sloane paid $78.2 million, or $2,793 a square foot, to buy the landmarked five-story, 28,000-square-foot home of the Polo Ralph Lauren flagship store at 867 Madison Ave. This represented the second time an Irish entity has owned the property. In 1989, the Dublin-based Power Corporation purchased the property, paying a record $36 million. It sold the property in 1996 to German-based TMW for about $35 million.
Another Irish investor is Dublinbased Warren & Partners, which created a joint venture with Willet Cos. of America. In November 2004, the joint venture bought a 131,630-square-foot office building in Greenwich, Conn. It paid $97.75 million, or $743 a square foot, the highest price ever paid for a suburban office building.
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Israelis also have been active in real estate investment in New York City. Lev Leviev serves as chairman and controlling shareholder of Africa Israel Investments. A few years ago, Africa Israel and Mr. Leviev joined the Israeli-born Shaya Boymelgreen to create Leviev Boymelgreen. In June, Leviev Boymelgreen paid $215 million for the 37-story, 1 million-square-foot 14 Wall St. Last January, it paid about $150 million for the 35-story building at 20 Pine St. Another Israeli,Yitzhak Tshuva, owns Delek Group and also real estate companies in America, Canada, and Europe. Mr.Tshuva is the owner of the Elad Group, which bought the Plaza Hotel. It paid $675 million to Saudi Prince Alwaleed bin Talal and a Singaporean hotel tycoon. In August 2004 and is converting it along with a number of office buildings, including the former Gift Building at 225 Fifth Ave. In March, Elad paid $50 million for the six-story office building at 650 Sixth Ave. It is redeveloping both of these buildings into residential condominiums and also building a number of condo towers in Manhattan. The Ofer Brothers Group of Israel owns Global Holdings, which owns the office towers at 99 Park Ave. and 875 Third Ave. In May 2004, a partnership of William Lie Zeckendorf, Arthur Zeckendorf, the Whitehall real estate fund of Goldman Sachs, and Global Holdings bought the Mayflower Hotel and the adjacent vacant lot for $401 million. The joint venture is now developing the site into a mixed-use retail and luxury residential condominium tower, 15 Central Park West.
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Last month, the Dubai-based investment firm Istithmar PJSC paid $705 million to purchase the 34-story,1.2 million-square-foot former Helmsley Building at 230 ParkAve.The seller was an investment group headed by Robert Bass that acquired the property from the estate of Harry Helmsley in 1998 for $250 million. The purchase was Istithmar’s first commercial investment in America. In July, the Dubai Investment Group, headed by Sheik Mohammed bin Rashid Al Maktoum, the crown prince of Dubai.The company is an affiliate of Dubai Holding, an entity formed by the ruler of the Persian Gulf emirate last year, to harness the expertise and resources of 17 mega-firms in his country. In September, the Dubai Investment group paid about $450 million, or $743,802 a room, for the Essex House Hotel at 160 Central Park South.
In October, the Spanish-owned real estate holding company Pontegadea, S.L., agreed to pay $107.48 million, or $2,828 a square foot, for the 38,000-square-foot retail condominium build ing at 130 E. 59th St. The condominium space is leased to Banana Republic and Gap stores and owned by the UJA-Federation of New York.
Montreal-based PSP Investments and CDP-Capital have been active purchasers of residential properties in Manhattan. This year, they joined with Ofer Yardeni and Joel Seiden, principals of Stonehenge Partners, in purchasing three residential rental developments. In September, the joint ventures purchased the Platinum Portfolio, rental buildings at 20 Park Ave., 41 Park Ave., 10 Downing St., and 167 E. 82nd St. In March, it purchased the Olivia at 304-324 W. 34th St. In June, it acquired Stonehenge Village at 120-160 W. 97th St.
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Last month, a senior partner at Apollo Real Estate Advisors, Lee Neibert, said: “Overseas investors are very interested in the U.S. They know what they want and what they don’t like.” The managing director of ABP Investments U.S., Barden Gale, said,”The cost of entry to become an owner of property in the U.S. for an overseas investor is very difficult.” Mr. Yardeni of Stonehenge Partners, on the other hand, said, “There are no foreign investors in New York. Once an overseas investor purchases a property, everyone welcomes you. When you purchase a building, everyone looks at you as a local guy.The banks works with you, the city works with you, the community welcomes you.That’s the beauty about New York. It’s not like in Germany or France, where no matter how many buildings you buy, you will always be considered a foreigner and outsider.”
In June,TMW paid $164 million for a 49% interest in 885 Third Ave. (aka the Lipstick Building) from Tishman Speyer Properties. In April, TMW paid $149.3 million for the 22-story office building at 1180 Avenue of the Americas.
Competition from overseas investors to own property in America is fierce. A recent survey by the Association of Foreign Investors in Real Estate said,”Foreign investment in U.S. real estate rose by a phenomenal 59% in 2003. New York City ranks second as the top U.S. city for real estate investment.” German investors continue to be active in New York City.
In 1973, the Germany-based Otto Group set up an American real estate group, the Paramount Group. Earlier this week, the Paramount Group Real Estate Fund III acquired a minority interest in the 47-story, 1 million-squarefoot office building at 1177 Avenue of the Americas. Paramount owns a number of office buildings in Manhattan including 1325 Avenue of the Americas, 712 and 745 Fifth Ave., 1540 and 1633 Broadway, 900 Third Ave., and 150 E. 52nd St.
In September, the Swiss Pension Fund AFIAA paid $40.75 million for the 12-story, Class B office building at 156 William St.
The stable dollar and the strength of the nation’s economy is fueling the desire of overseas and domestic investors to own real estate in New York.
Mr. Stoler is a television broadcaster and senior vice president at First American Title Insurance Company of New York. He can be reached at mstoler@firstam.com.