Benchmarks: Property

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Acquisition of commercial 'trophy' property, property portfolios and residential property provides some benchmarks for acquisitions and disposals during the telecommunication booms and busts of the past twenty years.

introduction

During Japan's land bubble of the 1980s Japanese corporations and individuals paid premium prices for art works, trophy buildings and golf courses from New York to Los Angeles. In Manhattan for example they acquired US$7.4 billion of real estate over three years ending in 1990, including Rockefeller Center, with an often visceral reaction over the "sale of American patrimony".

Collapse of the Tokyo stock market and land bubble in 1990 - after back of the envelope calculations that the grounds of the Imperial Palace in Tokyo were worth more than the state of California -
was initially reflected in declines in Manhattan property values . Japanese investors lost hundreds of millions; many of the buildings found their way back into US hands. In Japan there were 15 years of falling real estate prices

One US observer quipped that

For all their downsides, trophy buildings offer CEOs a form of immortality. Few of the cars built by Walter Chrysler in the '20s survive, but the art deco spire he commissioned still looms majestically over Manhattan. You'll never make history for moving your employees into a nondescript suburban office building.

landmarks

Recent landmarks include -

2006

Fortress buys 47,600 homes from city of Dresden for €1.7bn
Tamir Sapir pays US$40m for Duke Semans mansion at Fifth Avenue & 82nd Street, New York

2005

E.On sells Viterra real estate arm (over 150,000 dwellings) to Deutsche Annington, controlled by Terra Firma Capital Partners, for US$8.3bn
General Electric agrees to buy Arden Realty for US$3.2bn
Metrovacesa buys Gecina for €3.8bn
Grosvenor Estate pays €50m for Paul-Bert and Serpette flea markets in Paris
Dubai royal family pays US$705m for 230 Park Avenue (Helmsley Building and New York Central Building), New York - previous sale US$225m in 1998
Brookfield Properties and Canada Pension Plan Investment Board buy O&Y Properties for C$2bn
FirstCal Industrial 2 buys Duke Realty portfolio for US$1bn
Stewart Rahr buys Burnt Point estate in East Hampton for US$45m
ING Clarion Partners buys Gables Residential Trust for US$3.6bn
ING buys Scottish Mutual and Scottish Provident property portfolio from Abbey National for £1.3bn
Dubai royal family pays US$440m for Essex House, New York - previous sale US$250m in 1999
MetLife sells 'PanAm building' at 200 Park Ave. to Tishman Speyer Properties and partners for US$1.72bn
Citibank tower in Long Island City sold for US$470m
Rupert Murdoch buys Laurance Rockefeller’s Fifth Avenue 20-room triplex apartment for US$44m

2004

Bank of America Center, San Francisco - US$825m
MetLife sells Sears Tower, Chicago - US$840m
Equity Office Properties Trust pays US$505m for 80% of 42-storey Verizon building at 1095 Avenue of the Americas, New York City
Lakshmi Mittal buys London mansion for US$128m
Ronald Perelman sells Palm Beach estate Casa Apava for US$70m

2003

Conseco gets US$1.4bn for 767 Fifth Avenue (General Motors Building), New York - acquired for US$878m in 1998
Beacon Capital pays US$910m for John Hancock Tower, Boston
MetLife sells 1 Madison Ave. to SL Green Realty for US$918m
Calvin Klein buys Francesco Galesi's Hamptons estate for US$28.9m

2002

Shorenstein pays US$250m for 500 W. Monroe St, Chicago
Citigroup sells its 39-storey tower at 399 Park Ave. to Boston Properties for US$1.06bn

2001

Oprah Winfrey pays US$50m for mansion in Montecito
Craigend bought by Bruce Davey for $16m from One.Tel founder Jodee Rich

2000

Nomura International consortium acquires 114,000 German railway worker flats for DM7bn

1999

CIBC Development Corporation sells property portfolio for C$2bn

1996

Granada sells George V Hotel in Paris to Prince al-Waleed bin Talal for £104m
Principal Finance Group acquires 57,000 unit married quarters estate from UK Ministry of Defence for £1.7bn

1991

Hideki Yokoi buys Empire State Building, New York, from Prudential Insurance for US$42m

1990

David Geffen pays US$47.5m for Beverly Hills residence of producer Jack Warner

1986

Union Carbide sells headquarters building for US$345m

1981

MetLife buys 58-storey, PanAm building at 200 Park Ave. from Pan American Airlines for US$401m

management and investment

Property investment and management landmarks include -

Macquarie Goodman Group Australian industrial real estate investment trust) agrees to buy UK property manager Arlington Securities for US$350m in 2005

studies

For Japanese FDI see Roger Farrell's 1998 Organisation, Motivations and Case Studies of Japanese Direct Investment in Real Estate 1985-94 (PDF), Mitchell Pacelle's Empire: A Tale of Obsession, Betrayal, and the Battle for an American Icon (New York: Wiley 2001) and Deyan Sudjic's The Edifice Complex: How the Rich and Powerful Shape the World (New York: Penguin Press 2005).

For US and European corporate megalomania see Donald Sull's Revival of the Fittest (Cambridge: Harvard Business School 2003).

Perspectives on residential property are provided in works such as Steven Gaines' Philistines at the Hedgerow: Passion & Property in the Hamptons (Boston: Little Brown 1998) and The Sky's the Limit: Passion and Property in Manhattan (Boston: Little Brown 2005)

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