The Norwegian Government Pension Fund Global has purchased a 45 percent stake in Times Square Tower from real estate investment trust Boston Properties for $684 million. The all-cash deal, which is expected to close within the next 90 days, includes the 45 percent ground leasehold interest and related tax credits. The purchase values the property, located at 7 Times Square, at roughly $1.52 billion.
Managed by Norges Bank Investment Management, the sovereign wealth fund entered into a joint venture agreement with Boston Properties to buy the ownership interest in the 47-story building. Boston Properties, which developed Times Square Tower in 2004, has retained a 55 percent interest in the property and will manage the building on behalf of the partnership.
“We are extremely pleased to form a new and important relationship with such a strong and reputable organization as Norges Bank, while at the same time once again demonstrating our ability to create and realize value for our shareholders through our development and management expertise,” said Mortimer Zuckerman, executive chairman of Boston Properties, in a statement.
The Class A building occupies a full block between 41st and 42nd streets and Broadway and Seventh Avenue. The 1.246 million-square-foot property currently is 99 percent leased to tenants that include Alleghany, Ann Taylor, Ashurst and O'Melveny & Meyers.
The deal marks the sovereign fund’s second transaction in the US. In February, it purchased a 49.9 percent stake in an office portfolio from TIAA-CREF for $600 million. Norway initially outlined its plan to invest stateside in December 2012, with the intention of eventually investing one-third of its target allocation for real estate in the US. The fund is mandated to gradually invest up to 5 percent of its total assets of NOK4.397 trillion ($730 billion) in real estate by 2020.