New York-based Somerset Partners has snapped up 450 Park Avenue for $509 million (€351.5 million), or approximately $1,566 per square foot, the most ever paid per square foot according to a Bloomberg report. The property was purchased from Taconic Investment Partners and New York State Common Retirement Fund.
Located in midtown Manhattan’s “Plaza District,” the 325,000-square-foot property stands 32 stories tall. Taconic acquired the office building in June 2002 and subsequently invested more than $13 million of capital improvements including a renovated lobby, upgraded passenger and freight elevators, renovated corridors and restrooms and an upgrade of building systems. The building’s current tenants include firms such as Tudor Investment Corporation, Bank of New York, PNC Financial Services, Banco Bradesco and Cleary Gottlieb Steen & Hamilton.
Somerset, which invests on behalf of European investors, is taking note of the favorable exchange rate between the dollar and the pound and euro: “If you’re a long-term player and you have European currency, it makes very good sense to buy in New York,” Somerset principal Keith Rubenstein said in the report.
Rubenstein added that he expected the property to yield 3 to 3.5 percent within the first year and strong income from the property as many tenant leases are set to expire in the next few years.
Private equity real estate firms have been active in the US office market this year. In August, Texas-based real estate investor Behringer Harvard acquired a portfolio of four office buildings from affiliates of Boston-based Beacon Capital Partners. The portfolio comprised four buildings in Chicago’s business district including One Financial Place, 10 South Riverside Plaza, 120 South Riverside Plaza and 200 South Wacker Drive.
In the same month, California-based Equastone acquired a 13-building office portfolio in Dallas for $382 million from Crescent Real Estate Equities. The properties were acquired as part of the $172.5 million Equastone Value Fund II.