Norges Bank Investment Management, the world’s largest sovereign wealth fund, together with Beacon Capital Partners have agreed to buy 1177 Avenue of the Americas in a deal that values the Manhattan office tower at $571.1 million.
Under the terms of the transaction, Norges will acquire a 95% ownership interest in the Midtown property while Beacon will take a 5% stake and perform asset management on behalf of the joint venture. The seller is a JV between California State Teachers’ Retirement System (CalSTRS) and Silverstein Properties, Norges announced Tuesday.
Completed in 1992, the 47-story property, also known as the Americas Tower, contains around 1,030,000 square feet of office space. Silverstein and CalSTRS paid more than US$1 billion to acquire a stake in the property in 2007, and then bought UBS out of the tower in 2021 in a deal that valued the asset at $860 million, according to reporting by The Real Deal at the time.
The latest sale to Norges and Beacon therefore represents a significant discount from the property’s pandemic-era value. Some notable recent leases include investment firm Starr taking 49,000 square feet in May, according to Bisnow. Law firm Kramer Levin is reported to be the tower’s biggest tenant, occupying around 280,000 square feet.
The sale of 1177 Avenue of the Americas comes after another sign of market pain, with an 18-story office building at 440 Ninth Avenue, near Hudson Yards, changing hands at slightly more than $100 million in August – far less than its $269 million valuation in 2018.
This past May, 590 Madison Avenue – a 1 million-square-foot office building next to Trump Tower – sold for a price reportedly between $1 billion and $1.1 billion. Although it was the largest deal in New York City since Google’s parent company, Alphabet, bought 550 Washington Street for $1.97 billion in 2022, the transaction marked another apparent distress sale as the amount was less than pension fund STRS Ohio’s $1.1 billion asking price.
Norges Bank Investment Management, manager of Norway’s government pension fund, oversees more than US$1.9 trillion in assets under management. The fund has some US$36 billion invested in real estate globally across 15 countries and 1,341 investments.
This past May, Norges invested US$800 million in the Blackstone Americas Logistics fund, a closed-end core-plus vehicle for logistics assets in the U.S. and Canada. The fund also reportedly bought a US$2.2 billion stake in a 48-property logistics and industrial portfolio from the Canada Pension Plan Investment Board.