Minority Stake in NoMad Building Sells for $1

The Canada Pension Plan Investment Board (CPP) has sold its 29% stake in 360 Park Avenue South for $1. Located on the southwest corner of East 26th Street, the 21-story approximately 389,000-square-foot building is currently vacant. As part of the sale back to developer Boston Properties, which has a 42% stake in the building, the pension plan is relieved of significant future obligations. Last trading in 2021 for $300 million, Boston Properties had initiated extensive renovations of the vacant asset, subsequently attracting San Francisco-based wealth manager Iconiq Capital in October 2023. However, the nearly 70,000-square-foot lease only brings occupancy to 18%. CPP had provided $71 million to the building, but by exiting now, it “avoids funding another $46 million in future funding obligations and saves $5 million in annual interest payments after Boston Properties assumed its share of the mortgage” — a $220 million loan provided by the Bank of New York Mellon maturing in December and carrying a 7.86% interest. As part of the deal, Boston Properties has also assumed CPP’s share of the “joint-venture’s $25 million in cash and working capital. Although the news delivers a “potentially ominous sign,” data by research firm Preqin indicating that investment in real estate by pension funds and other big institutions lowered by “nearly 60% in 2022, to $26 billion,” but confidence in the sector remains among others as exemplified by Boston Properties’ president Douglas Linde upon stating, “There are institutional investors who have just had a perspective that, at this moment in time, investing additional capital in our sector is not what they want to do, we obviously have a very different perspective.”

Source:    https://www.crainsnewyork.com/real-estate/canada-pension-plan-sells-stake-360-park-ave-s-boston-properties-1-dollar