Brookfield Office Properties, on behalf of its $7.7 billion US Office Fund, has sold the Newport Tower, a 1.1 million-square-foot Class A office building in Jersey City, New Jersey, to the Multi-Employer Property Trust (MEPT), a $5.3 billion open-end commingled real estate fund. At a price of $377.5 million, the purchase is the single-largest office transaction in the history of the Garden State.
“This was the optimal time to monetise this mature asset, having achieved opportunistic returns for us and our fund partners,” said Dennis Friedrich, president and global chief investment officer of Brookfield, in a statement. “During our six-year period of ownership and management, we were able to successfully lease-up, stabilise and incorporate sustainable strategies in the building to significantly increase value.”
During its ownership, Brookfield increased the occupancy rate of the 36-story building, whose anchor tenants include BNP Paribas and AXA Equitable, from just north of 60 percent to 89 percent. The company had been hoping to fetch $400 million for the property, located at 525 Washington Boulevard, when it was put up for sale in July, according to a source.
“Newport Tower is a significant acquisition for MEPT since it provides the fund with an investment in a high-quality, stabilised asset in the New York-New Jersey market, which is one of the strongest office markets in the US,” said David Antonelli, executive vice president at Bentall Kennedy, the real estate investment advisor to MEPT.
Brookfield, through a joint venture with The Blackstone Group, acquired the property in a $7.6 billion buyout of its previous owner, Trizec Properties, in 2006. Brookfield Asset Management, the company’s global asset management arm, established the US Office Fund to acquire Newport Tower – which traded for $272 million that year – along with 57 other office properties from Trizec. In August, Blackstone exercised its call option on 18 of the properties it manages through the joint venture in exchange for its interests in the 38 properties Brookfield manages, effectively dissolving the joint venture.
With the acquisition of Newport Tower, MEPT, which is backed by more than 360 multi-employer, public employee and corporate pension plans, has completed more than $1 billion in real estate acquisitions this year, according to Martin Standiford, senior vice president of acquisitions at Bentall Kennedy. “Specifically, the type of assets that we seek to acquire for MEPT are high-quality CBD office properties, grocery-anchored retail centres in urban in-fill or established suburban neighbourhoods and multifamily assets in urban markets serving the Echo-Boom generation,” he said.