JERSEY CITY-In what seller Brookfield Office Properties calls the largest single office asset transaction in New Jersey history, Multi-Employer Property Trust (MEPT) has acquired Newport Tower at 525 Washington Boulevard for $377.5 million.
The 1.1 million-square-foot, 36-story tower located on the Hudson waterfront is 89% leased. MEPT acquired the tower through a limited partnership subsidiary. The purchase now brings the total value of acquisitions by MEPT to $1 billion this year, according to Bentall Kennedy, its real estate advisory firm.
“We are seeking more exposure to newer markets, and metro New York City is one of those where we’ve been searching for assets,” said Martin Standiford, senior VP of acquisitions at Bentall Kennedy tells GlobeSt.com. The all-cash deal closed October 18, though long-term financing may be put in place in the future, he said.
MEPT/Bentall Kennedy were drawn by--and it’s even something of a bargain. “We think it’s a great asset, with very good credit tenants,” as well as being very well maintained by Brookfield, Standiford said. “And the price per square foot is much lower than it would be in New York City. We hope this is the first of several acquisitions over the next few years.”
Newport Tower, the third tallest tower in the city, is part of a mixed-use project developed by a partnership of Melvin Simon & Associates (the predecessor company to Simon Property Group), The Glimcher Co. (now Glimcher Realty Trust) and the LeFrak Organization. The office tower, located adjacent to Newport Centre mall, was opened in 1990. Simon continues to own and manage the retail property.
The ownership of the office tower has changed over the years. Brookfield acquired the building, which was LEED Gold certified earlier this year, as part of its $7.6 billion acquisition of Trizec in 2006. At that time, the building was 60% leased. Current tenants include BNP Paribas SA and AXA Equitable Life Insurance Co.
“This was the optimal time to monetize this mature asset, having achieved opportunistic returns for us and our fund partners,” says Dennis Friedrich, president and global chief investment officer of Brookfield Office Properties, in a separate statement. “During our six-year period of ownership and management, we were able to successfully lease-up, stabilize, and incorporate sustainable strategies in the building to significantly increase value.”
Jeffrey Dunne, Kevin Welsh and Brian Schulz collaborated with Darcy Stacom and William Shanahan of CBRE’s Manhattan Office represented Brookfield Office Properties in the transaction. Bentall Kennedy, on behalf of MEPT, retained CBRE for property management and leasing.
“The availability of a trophy asset of this size and quality on the waterfront is rare and represented an extraordinary investment opportunity,” Dunne says in a statement. “The intrinsic value of Newport Tower with its long-term investment grade cash flow and its ability to capture near term upside through future rental rate spikes and lease up of the available space is compelling. I expect Newport Tower will experience strong long-term appreciation.”
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