Canadian pension funds boost New York property ownership

Canadians biggest foreign buyers of U.S. commercial property last year

Canada’s two largest pension funds are expanding their holdings of New York real estate, announcing separate deals Thursday to buy stakes in Manhattan office towers.

Ivanhoe Cambridge Inc., the Montreal-based real estate unit of pension fund Caisse de depot et Placement du Quebec, agreed with its joint-venture partner to acquire a 49 per cent interest in 330 Hudson St. for about $150 million, according to a statement. Canada Pension Plan Investment Board, the country’s largest pension fund, is taking a 45 per cent stake in 1 Park Ave., controlled by Vornado Realty Trust.

Canadians were the biggest foreign buyers of commercial property in America last year and the second-largest in New York, behind the Chinese, according to Real Capital Analytics Inc. Ivanhoe Cambridge has made five U.S. office deals through its partnership with Callahan Capital Properties as it seeks to boost its real estate investments.

“Canada has tremendous financial resources with which to invest and they’re some of the largest sovereigns in the world,” Doug Harmon, a broker with Eastdil Secured LLC who worked on both deals, said in an interview. “They’ve had a big head start as far as investable dollars and making friends and relations in New York.”

Ivanhoe Cambridge’s Manhattan deals include an October agreement for a 51 per cent stake in the News Corp. building at 1211 Avenue of the Americas. The transaction valued the tower at $1.7 billion.

The company’s investment in 330 Hudson, located in the in- demand midtown south neighbourhood, values the 16-storey building at $306 million. Beacon Capital Partners, represented by Eastdil in the transaction, recently led a redevelopment of the 467,000square-foot tower, including the addition of eight column-free floors.

“We hope to capitalize on more

Canada has tremendous financial resources with which to invest.

opportunities in key U.S. markets soon,” Adam Adamakakis, Ivanhoe Cambridge’s executive vice president for U.S. investments, said in the statement.

Toronto-based Canada Pension invested $108 million to boost its stake in 1 Park Ave., a 925,000-square-foot property east of Herald Square, to 45 per cent, the company said. It previously held an indirect interest of about 11 per cent through an investment in a Vornado fund. Eastdil’s Harmon and Adam Spies were the brokers on the deal for Vornado.

The investors value the building at $560 million, including the assumption of $250 million in debt. New York-based Vornado bought a 95 per cent stake in the tower in 2011, which valued it at $427 million.

“For us, and perhaps other institutional investors, the strength of New York and the resilience of New York in the long term is very attractive,” Peter Ballon, vice president and head of real estate investments in the Americas for Canada Pension, said in a phone interview.

“The real estate conditions right now in terms of fundamentals are very strong and we believe that it’s a market that’s going to be around for the long run.”

Canada Pension’s most recent New York acquisition was in early 2012, when it bought a stake in 10 E. 53rd St. The majority owner of the 388,000-square-foot tower is SL Green Realty Corp., Manhattan’s largest office landlord.