Here Comes Canada: Brookfield Says It's The New No. 1 Office Owner In NYC
Brookfield’s acquisition of Forest City Realty Trust has made the Canadian equity giant New York City’s biggest commercial landlord, the company announced Wednesday.
"We are about 10 years into the economic recovery, yet as many are sitting on the sidelines, Brookfield has remained very active — both internationally and also locally," Brookfield Property Partners Chairman Ric Clark said at the Real Estate Board of New York’s annual holiday luncheon Wednesday.
"In fact, by the end of the week, we expect to close on the acquisition of Forest City, which will move us into the top spot as the largest owner of office properties in New York City."
In addition to becoming the largest landlord in the country's largest office market, Clark said Brookfield is also tops in Houston, Los Angeles, Toronto, Calgary, Perth and London and among the top owners in Sydney, Melbourne, Seoul and Berlin.
With Forest City in the fold, Brookfield will own 25 office properties in New York City, comprising 26M SF. It will also own 9,200 apartments across 18 properties. The company has 2,900 units under development or in planning and just shy of 3M SF of retail space.
Brookfield's New York City portfolio is worth roughly $32B, Clark said, and accounts for 20% of its global real estate holdings.
RXR Realty is second in the city with 24.6M SF, and SL Green, long the city's top office owner, has 23.9M SF after a year of being a net seller of properties, according to Crain's data. Vornado is in fourth place with 23.5M SF.
Forest City shareholders greenlighted the $6.8B acquisition by Brookfield last month, despite the former CEO of Forest City, Albert Ratner, working to halt the deal.
In July, Brookfield and Forest City reached a deal for Brookfield's all-cash offer — following a monthslong, on-again, off-again plan for the sale. In New York, Brookfield will now own the Frank Gehry-designed rental tower at 8 Spruce St. in Lower Manhattan, the New York Times building at 620 Eighth Ave. in Midtown and the MetroTech complex in Downtown Brooklyn.
Analysts believe Brookfield’s move to buy Forest City was another example of the company’s innovative approach and its ability to unlock value where others have not been able.
“Brookfield has exhibited patience with their acquisitions … They are not afraid [to buy] properties [that are] out of favor and take them private and operate them privately for their investors,” REIT analyst Paul Adornato, a former managing director with BMO Capital Markets who followed Forest City for several years, told Bisnow this summer.
This year, Brookfield bought GGP, the second-largest U.S. mall owner, in a $15B takeover. In August, Brookfield paid $1.2B for a 99-year ground lease on Kushner Cos.’ troubled office tower at 666 Fifth Ave.
"Our plan, although I mentioned is preliminary, is very similar to 5 Manhattan West," Clark said of the plans for 666 Fifth. "We will also modernize the mechanical system and upgrade the lobby and common areas … You will be hearing much more about this next year."
Though it is only now becoming the biggest commercial owner in the city, Brookfield has been leading the office leasing pack for a while.
Last year in Manhattan, it signed nearly 3.7M SF worth of office leases, according to Brookfield’s figures, putting it well ahead of its competitors.
And this year it has forged further into the multifamily and retail space, spending $165M on 4 acres in the South Bronx, where it plans to build 1,300 housing units. It also bought seven storefronts on Bleecker Street, and is testing out new retail concepts in the spaces.
"Probably the thing about my career that I regret the most is waiting until eight years ago to get involved in the multifamily business," Clark said. "It’s an excellent performing asset class, and one we missed the boat on. So for the last eight years we’ve really focused on apartments ... [And] one of the reasons why we like the sector is that the world's population continues to grow rapidly."
