Caisse partners in US$5.3B purchase of Manhattan’s largest apartment complex

Caisse partners in US$5.3B purchase of Manhattan’s largest apartment complex

Main pic: A person works in the Oval Study at the Stuyvesant Town complex, Tuesday, Oct. 20, 2015, in New York. Manhattan’s largest apartment complex will be sold for $5.3 billion in a deal that will preserve nearly half its 11,232 units for middle-class families, New York City officials said Tuesday. (AP Photo/Mary Altaffer).

MONTREAL — Quebec’s pension fund manager is adding to its presence in New York City in a big way by partnering in a US$5.3-billion deal to buy Manhattan’s largest apartment complex.

Ivanhoe Cambridge, the real estate arm of the Caisse de depot, and private equity firm Blackstone will buy the Stuyvesant Town and Peter Cooper Village complex from CW Capital.

The 32-hectare complex on Manhattan’s east side has housed middle-income New Yorkers since it was built in 1947 for returning Second World War veterans.

About half of the complex’s 11,232 units have seen rents increase to market rates of up to US$10,000 per month and average about US$4,000.

But under the terms of the deal, about 4,500 apartments are to be reserved for middle-income families for at least 20 years. Another 500 would be kept for lower-income families. None of the new tenants will pay more than 30 per cent of their income in rent.

The parties can revisit the deal between now and 2036 in order to create more affordable housing protections.

In addition, tenants in about 1,400 apartments whose regulated rents were set to expire in 2020 will see rent increases limited to five per cent annually for five years.

Ivanhoe Cambridge chairman and CEO Daniel Fournier said the company has been an important investor in New York City for more than 20 years. It owns 15 residential buildings in the city with 2,100 units that are valued at US$1 billion, plus five office towers.

The investment flows from Ivanhoe Cambridge’s decision four years ago to beef up its residential portfolio by targeting 15 cities around the world, including London and in Silicon Valley.

“New York was the start of it and this is a great continuation…(and) a very interesting, very exciting step for us,” Fournier said in an interview.

Ivanhoe twice looked at the complex in the last seven years. It has previously partnered with Blackstone in Europe and Australia.

Original owner MetLife sold the complex for US$5.4 billion in 2006 but the new owners, Tishman Speyer Properties LP and BlackRock Inc., defaulted on their loan.

CW Capital Asset Management LLC has controlled the property since 2010.

— With files from The Associated Press

Follow @RossMarowits on Twitter.

Ross Marowits, The Canadian Press

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