China Vanke has made its third real estate investment in the US, and its first acquisition of a completed project in North America, by purchasing the historic Bush Tower in Manhattan for $125 million.
According to a story in New York trade publication the Real Deal, Vanke bought an undisclosed majority stake in the 30-storey office building from leaseholders Tribeca Associates and Meadow Partners, with Tribeca maintaining a share in the lease as a managing partner for the property.
The acquisition of the 20,400 square metre (220,000 square foot) building comes after Vanke, which is China’s second-largest real estate developer by sales, invested in a San Francisco condo project with Tishman Speyer in 2013, and joined US developer Hines, and China bad asset bank Cinda, in buying into a New York development led by Aby Rosen’s RJR.
US Partners Turn 100 Percent Profit in Two Years
Vanke’s new Manhattan prize means a sizable windfall for Tribeca Associates and Meadow Partners, who acquired a new 85-year leasehold on the 1918 vintage, neo-gothic tower in September 2013 for $65 million.
Tribeca Associates and Meadow Partners were advised on the transaction by Eastdil Secured’s Doug Harmon, Adam Spies and Kevin Donner. Eastdil also advised Hilton Hotels on the sale of the Waldorf Astoria in New York to China’s Anbang Insurance last year for $1.96 billion.
The Bush Tower is just a few minutes walk from 7 Bryant Park, which the Bank of China purchased from Houston-based developer Hines for $600 million late last year. Hines is Vanke’s partner in developing a 61-storey luxury residential building in Manhattan, together with RJR.
Vanke Moving into Commercial Assets?
In purchasing the Bush Tower, Vanke, which made its name as a developer of mid-range homes for China’s emerging middle class is not only heading overseas again, it is also venturing into what looks like acquisition of a mature property for investment purposes, and by acquiring an office tower appears to be heading into a market sector where it has considerably less experience than it does in residential.
Besides the RJR project in New York, Vanke has also joined with US developer Tishman Speyer in developing the San Francisco’s new tech billionaire housing tower, The Lumina.
In China, Vanke has developed office park properties, primarily for sale to owner-occupiers, but has largely stayed away from direct investment in office properties for lease.
When Tribeca and Meadow Associates bought the Bush Tower in 2013 it is said to have been 80 percent occupied, but according to data from US commercial property information provider CoStar, as cited by the Real Deal, Bush Tower is now just 41 percent leased.
In locations such as Sydney, Chinese developers have been buying aging office towers in the downtown area for redevelopment into residential space.