NEW YORK CITY-With a new general partner now committed to the Hudson Yards project, Related Cos. said Wednesday it has signed a binding contract on a 99-year lease with the Metropolitan Transportation Authority for the 26-acre site on Manhattan’s Far West Side. That joint venture partner is Oxford Properties Group, the real estate investment and development arm of Canadian pension fund OMERS, the Ontario Municipal Employees Retirement System.
A spokeswoman for Related tells GlobeSt.com that Oxford will commit up to $475 million in equity to the project. In the meantime, the JV is putting up a $21.75-million deposit, to be followed by two deposit of approximately $11 million each in six and 12 months' time, according to the MTA. Oxford replaces Goldman Sachs as Related’s financial partner on Hudson Yards, Goldman having pulled back on its involvement this past February.
Stephen Ross, Related’s chairman and CEO, says in a statement that Oxford’s commitment to the 12-million-square-foot mixed-use project is “an unequivocal show of confidence in the future of New York. Oxford has an over 50-year track record of success and global reach, making them an ideal partner for Related on the West Side Yards.” Oxford oversees and manages approximately $18 billion of real estate for itself and on behalf of its co-owners and investment partners, including the Royal Bank Plaza in Toronto, Watermark Place in London and Centennial Place in Calgary.
Although a revised agreement with the MTA allows the developer to hold off on closing the Hudson Yards deal until certain triggers are reached in the city’s real estate market, Related’s Jay Cross told the Wall Street Journal on Wednesday that the JV with Oxford and encouraging signs in the real estate market “suggest to us we will be under way before the triggers are hit.” Cross, president of Related Hudson Yards, expressed increasing optimism that the project would sign a tenant this year, according to the WSJ.
A partnership of Related and Goldman was originally selected to develop the project in May 2008. Build-out of the $15-billion MXD, which will include office and retail components along with housing and public space, reportedly will get under way soon after the MTA finishes the Number 7 subway line extension to Eleventh Avenue, now projected for completion in 2013. Before major construction can begin, though, Related must build a $1-billion platform over the MTA's West Side rail yards, which are in daily use by the Long Island Rail Road.
Representing Related in arranging the JV with Oxford was a Fried Frank team including real estate partner Stephen A. Lefkowitz, real estate special counsel David I. Badain and real estate associates Molly M. Dunham and Tal J. Golomb. The law firm also represented Related in the December 2009 rezoning of the rail yards to permit this development, says a spokeswoman for Fried Frank. Working on that was real estate partner Melanie Meyers, Dunham and real estate associates Zachary B. Bernstein.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
