New York’s biggest office landlord has scored $525 million in new funding for a $3.2 billion Manhattan development, thanks to a recent agreement with Korea’s National Pension Service (NPS) and a division of Houston-based developer Hines.
According to a statement by SL Green Realty, NPS is taking a 27.6 percent interest in One Vanderbilt Avenue, while Hines Interest LP is tagging along with a 1.4 percent stake in the 57-storey project next to Grand Central Terminal in Manhattan’s Midtown.
For SL Green, the investment helps move the Kohn Pedersen Fox-designed development toward its planned 2020 completion date. And for NPS, the investment provides an opportunity for yield shortly after the Korean fund announced its intention to devote more of its holdings to alternative assets.
Topping Up the Capital Stack on 427 Metre Tower
“The National Pension Service of Korea is an extraordinary partner for us at One Vanderbilt and will help realize our shared vision for developing the best building in New York City,” said SL Green CEO Marc Holliday. “Hines has been with us at One Vanderbilt from the beginning and will be a terrific addition to the joint venture.”
“It is a privilege for Hines, after seven years of working together on this iconic project, to join SL Green as well as NPS, a significant global investment partner of our firm, in the singular project that is One Vanderbilt,” said Hines chairman and founder Gerald Hines. Before taking this equity stake, Hines had already been the development manager for the 1,401 foot (427 metre) tall tower. The privately-held developer is now described as a co-developer for the project, which broke ground in October of last year.
The development will include 1,408,000 square feet (130,000 square metres) of grade A office space and 32,000 square feet of retail.
The South Korean investment comes after the SL Green had secured a $1.5 billion construction loan for One Vanderbilt Avenue from Bank of China in July of last year.
NPS Looking for Real Estate Deals
For NPS, the One Vanderbilt Avenue project provides an opportunity for the world’s third-largest pension fund to look for yield beyond securities markets.
“South Korean stocks have been stuck in a box for the last five years. World stocks might run into headaches as the U.S. raises rates. We must boost our income from alternatives,” the fund’s chief investment officer, Kang Myoun-wook told Reuters in October of last year.
While the fund announced an interest in infrastructure and biomedical investments at the time, it made clear that it was looking to ramp up its holding in alternative assets in general.
“One Vanderbilt Avenue will transform New York’s skyline and set a new standard for world-class office space, and the National Pension Service of Korea is thrilled to join SL Green and add this new icon to our portfolio,” said Scott Kim, Head of Global Real Estate for NPS.
The South Korean fund had assets under management of 540.7 trillion won ($476.27 billion) at the end of July last year.