REAL ESTATE - Morgan Stanley Real Estate has made a major office building purchase in New York City with the acquisition of the one million2ft. 2 Park Avenue in Midtown Manhattan.
The purchase price for the property was $519m(€400m). This was an all-cash transaction.
Dave Hardman, managing director and head of US real estate investing for Morgan Stanley, said: "We fell good about being able to own a high quality asset in one of the best office building markets in the country.
"We have seen in the past couple of years that Midtown Manhattan for office buildings has had improved occupancies and rising rental rates." Vacancies in the sub-market are now at 4.4%, among the lowest in the country.
Morgan Stanley has purchased the property for its open-ended commingled fund, The Prime Property Fund. Hardman said: "This asset will help us get closer to our allocation for office buildings. Previous to this deal, we were under allocated for the property type."
The Park Avenue property is considered a core office building. The property is now 95% leased. The asset was first developed in 1928, but has been renovated twice in the past nine years. Amenities in the complex include the Artisanal Fromagerie & Bistrow, a 43-car parking garage and two banks.
The Prime Property Fund now has total gross assets of $6.3bn. This core commingled fund has traditionally invested in the four main property types office, industrial, retail and apartments.
The fund has also invested in some specialty property types. One example is self storage, but it has also been involved in some public to private real estate deals. In February of 2006 it bought Amli Residential Properties Trust for $2.1bn.
Morgan Stanley is still attracting new investors to Prime Property, with several state pension funds committing capital over the past 12 months. These have included a $175m allocation from Virginia Retirement System, $150m from New Jersey State Investment Council and $50m from Ohio Police & Fire Pension Fund.
Morgan Stanley mostly looks for transactions in gateway cities across the US, including New York, Boston, Miami, San Francisco, San Diego and Los Angeles.