By Sarah Trefethen
Investors from opposite sides of the world have teamed up to buy a 40 percent stake in the General Motors Building at 767 Fifth Avenue.
The deal, which is reported to have placed the value of the iconic 50-story, two million s/f tower at $3.4 billion, highlights the growing role of international investors in the local real estate market.
They buyers are Zhang Xin, a prominent Chinese developer who is listed on Forbes’ Magazine’s lists of “Most Powerful Women” as well as its “China Rich List,” and the Brazilian banking family, the Safras.
According to CBRE, the deal is the largest investment sale to close in New York since 2008. Darcy Stacom and Bill Shanahan of CBRE represented the sellers, Goldman Sachs U.S. Real Estate Opportunities Fund and Meraas Capital.
Observers say it’s little surprise that the biggest deal since the recession would involve international money.
“The amount of foreign capital that is coming into the marketplace is unbelievable,” said Bob Knakal, chairman of Massey Knakal Realty Services.
As of the beginning of May, Massey Knakal has done deals with individuals from 39 different countries in the course of 24 months, he said. Chinese investors alone bought nine properties, the most from any one country on Knakal’s list.
While foreign institutions are also showing increased interest activity in the New York market (the Bank of China issued a $600 million mortgage on the Sony Building in March,) Knakal said most of the actual buying is on the part of private individuals. “The big money certainly is looking, but we’re seeing more private investment… a lot of the foreign individuals — and I’m sure it’s not the case with the institutions — are investing more for capital preservation than for yield,” he said.
Compared to many other countries, the U.S. offers political and economic stability, and New York real estate is seen as a particularly safe place to park money, Knakal said. And as far as he’s concerned, the more the merrier.
“I think the implication for the local market is that we’re fortunate that we’re able to attract that kind of capital,” Knakal said.
Boston Properties continues to hold the controlling 60 percent stake in the GM Building, which was built in 1968 and designed by architect Edward Durell Stone.
The tower’s Central Park views and iconic white marble façade contribute to its position as one of the highest-rent office buildings in the city. The building hosts Apple’s glass cube flagship on its Fifth Avenue plaza.