By Linda O’Flanagan
New York’s real estate community sat up and took notice of the Scandinavian kingdom of Norway today (Tuesday).
TIMES SQUARE TOWER
Boston Properties, Inc. announced it will sell a slice of its Times Square Tower to Norges Bank, the Oslo-based institution that runs what many consider the world’s largest sovereign wealth fund.
The REIT said that it had entered into a binding purchase and sale agreement with Norges to sell a 45% interest in the ground leasehold interest and related tax credits for $684 million.
The property is unencumbered by debt. Boston Properties and an affiliate of Norges Bank will form a joint venture upon closing, and Boston Properties will retain property and leasing management for the venture.
Norges Bank is the central bank of Norway, Europe’s largest oil and gas exporter, according to the International Energy Agency, an industry that pumps money into the Government Pension Fund.
The bank announced late last year that it planned to spend $11 billion from the Fund increasing its global real estate holdings. It made entry to the U.S. property market in February when it bought a $1.3 billion stake in a portfolio of five office buildings ownered by TIAA-CREFF.
At the time, Karsten Kallevig, the fund’s manager, said, “This is the fund’s first real estate investment outside Europe and is in line with our strategy to build a high-quality, global property portfolio.”
Beyond a formal announcement on its website, the Norges made no comment on its purchase of Times Square Tower, a 1,246,000 s/f Class A office tower with retail space and signage. The building was developed by Boston Properties and completed in 2004, and it is currently 99% leased.
MORT ZUCKERMAN
The property is subject to a ground lease with The City of New York with 76 years remaining, and it benefits from a Payment In Lieu of Taxes (PILOT) program through June 2024. The joint venture will hold the contractual right to purchase the fee interest in the property beginning in July 2024.
Mort Zuckerman, founder and chairman of Boston Properties, said he was “extremely pleased” to form a new relationship with Norges Bank.
Boston Properties’ is set to open its new marquee office tower at 250 West 55th Street, this winter with anchor office tenants Morrison & Foerster and Kaye Scholer.
Skadden is advising Boston Properties in the Times Square Tower sale. The Skadden team includes real estate partner Marco Caffuzzi and associate Adir Greenfeld.
Goodwin Proctor partners James Broderick, Edward Glazer, Mark Kirshenbaum, and associates Laura Sherman and Argyrios Saccopoulos served as legal advisor to Boston Properties on the joint venture announced alongside the sale.
