Blackstone agrees to jumbo $2.2bn NYC exit

Sale price of Three Bryant Park in Manhattan implies a 363 percent uplift in value since Equity Office Properties bought an 80 percent stake in the former Verizon HQ in 2005.

The Blackstone Group has sold Three Bryant Park in Manhattan, New York City, for $2.2 billion to Ivanhoé Cambridge and partner, Callahan Capital Partners, it was revealed today.

Three Bryant Park, which is located at 1095 Avenue of the Americas, was part of the Equity Office Properties Trust (EOP) portfolio Blackstone inherited when it took over EOP for $39 billion in 2007. It was not included, however, in the EOP Manhattan portfolio that Blackstone simultaneously flipped to Harry Macklowe for $7 billion.

Records indicate that EOP originally agreed to buy an 80 percent interest in Three Bryant Park in April 2005 for $505 million. That would imply that the value of the asset was $606 million back then and the sale price announced today represents an increase in value of 3.6 times within 10 years, or a 363 percent uplift.

The one-million-square-foot, 41-story tower is also known as the Verizon Building, and is 97 percent leased. At the time EOP bought its stake, the company said Verizon would retain ownership of 200,000 square feet of the property and lease around one million square feet until it relocated to 140 West Street, the former headquarters of New York Telephone.

Verizon still has space in the building, which is also shared with MetLife and Dechert, the law firm.
Speaking about the acquisition, Arthur Lloyd, executive vice president, Global Investments Ivanhoé Cambridge, said the opportunity to acquire a “truly iconic property” like Three Bryant Park was extremely rare.

He added: “As we redeploy capital that has been rotated out of non-core assets globally, Three Bryant Park represents a cornerstone of our expanding US office platform.”

As far as Blackstone is concerned it is clearly in disposition mode for remaining EOP assets. In December, Blackstone sold a large portfolio of California offices that was also part of EOP to Hudson Pacific. In that case, Hudson bought 26 properties totaling 8.2 million square feet in a deal valued at $3.5 billion.

The twist in that deal, however, was that Blackstone accepted payment for the portfolio partly via shares in Hudson. Blackstone accepted $1.75 billion in cash and 63.5 million in shares, giving Blackstone a 52 percent stake in the company. At the time, Jon Gray, Blackstone’s global head of real estate, said: “We chose to take a major stake in Hudson given its high-quality portfolio, outstanding management team and attractive prospects for growth.”