CB Richard Ellis Strategic Partners Value 5 has sold 49% of the iconic Bertelsmann Building in Manhattan to HSBC Alternative Investments Ltd. and Edge Fund Advisors based on a $520 million building price, said Vance Maddocks, president of CBRE Strategic Partners. CBRE still owns the remainder.
Since the 44-story building was completed in 1990, many real estate concerns have made and lost millions on the skyscraper located in New York's Times Square. After five years, the 44-story skyscraper was an empty building that was already $200 million in red.
The fund which has a value-added strategy bought the building in December 2008 at a distressed sale for $360 million from Harry Macklowe. Fund executives sold off a good chunk of the building in a move to take advantage of a liquid market in minority interests in buildings in just two cities New York and Washington, Mr. Maddocks said.
Even though this is the only building located in either New York or Washington in the CBRE Strategic Partners five fund series, firm executives plan to sell minority interests in other buildings in the fund as markets in other cities develop, he said.
It's a cake-and-eat-it-too situation, Mr. Maddocks said.
The fund made some improvements and secured additional tenants. It sold off the minority position in order to realize the value that had been added but also retain an interest to capitalize on the expected increase in its value, he explained.