Bouwinvest Real Estate Investors, the Dutch manager whose largest client is the pension fund for Dutch construction workers, is putting money into U.S. office buildings through a new account run by Tishman Speyer. The vehicle’s first investment is the Chrysler Building. The two firms announced the separately managed account on Oct. 22. It joins a Tishman Speyer investor group that has about $700 million of equity available, which the firms said represents about $1.5 billion of purchasing power.
According to the announcement on Bouwinvest’s website, the account will target “institutional quality office buildings in U.S. markets with strong fundamentals, resilient demand, and limited new supply.” It will focus on core-plus and value-add deals, strategies that generally involve buildings needing leasing, renovation or repositioning rather than fully leased, stabilized properties. The account may invest alongside other Tishman Speyer office vehicles and mandates and with other institutional investors.
Besides New York, Boston, Chicago and San Francisco, Tishman Speyer said it will pursue deals in what the announcement calls “America’s established growth markets.” The release did not name those markets or give a target number of acquisitions.
Starting with a 1930 landmark
The first investment is the 150-year ground lease on the Chrysler Building at 405 Lexington Avenue in Manhattan. Tishman Speyer and its partners finalized that lease earlier in October. When the deal was announced Oct. 7, Tishman Speyer and the building’s landowner, The Cooper Union, said Tishman Speyer would invest $235 million plus ground rent. PSP Investments was named lead investor, and the deal was financed entirely with equity.
The new announcement says Tishman Speyer plans “an extensive building improvement and hospitality program” at the 1.3 million-square-foot tower. The goal is to reposition it as one of Manhattan’s most distinctive boutique office buildings, pairing the address with a workplace designed for current tenants.
“We are pleased to expand our investing partnership with Bouwinvest through this new mandate,” Tishman Speyer Senior Managing Director Nate Shanok said in the announcement. “Together, we see attractive opportunities to acquire well-located office assets in markets with durable demand drivers and limited new supply, and reposition them to meet the evolving needs of today’s customers.”
Robert Wagenaar, Bouwinvest’s director of North American investments, called the Chrysler Building “a fitting first investment for this mandate.” He said it shows how Bouwinvest invests internationally: “selectively, early in the cycle and through specialist partners like Tishman Speyer.”
“We now see a compelling tactical opportunity in the US Office market to invest with a strong locational focus and brown-to-green angle,” Wagenaar said. “Brown-to-green” is industry shorthand for buying older, less energy-efficient buildings and upgrading them to modern environmental standards.
Why a pension manager is buying office now
Bouwinvest says it serves more than 35 institutional clients. It originated with bpfBOUW, the Dutch construction workers’ pension fund, which remains its largest client and its shareholder. Wagenaar said Bouwinvest built its international capabilities for bpfBOUW over more than two decades. He said the firm is now offering that platform to other institutional investors “looking for active access to opportunities that are difficult to reach on their own.”
The two firms already work together outside the U.S. Bouwinvest took part in the first closing of Tishman Speyer’s Korea Living Venture, a fund of about $400 million that buys, repositions and develops multifamily and accommodation properties in Seoul.
The partners’ stated thesis rests on durable demand and limited new supply. Other investors have also moved back into U.S. office this year. Real Capital Solutions launched a $350 million fund to buy distressed U.S. offices, and Oxford bought a Boston Seaport tower for $435 million, 10% below its 2019 price.
On our reading, the “limited new supply” in both firms’ statements carries much of the argument: if few new towers are built, well-located existing buildings that are renovated face less competition for tenants. The announcement describes an approach built on location and renovation rather than on buying distress, and it starts with one of New York’s best-known towers. More office coverage is in our commercial real estate section.
