There is no doubt that the worldwide real estate market tends to throw up some mouthwatering figures with the purchase of the Olympic Tower at 641 Fifth Avenue valued at a total of $1.07 billion. The property is now 100% owned by Crown Acquisitions and Oxford Properties Group after acquiring the 50.13% they did not already own. Crown Acquisitions is the investment vehicle for the Chera family with the Onassis Foundation the selling party.
This brings to a close a three-year venture to take full control of the Olympic Tower with the investment partners having paid $418,908,000 for a 49.87% stake back in 2012. It is believed that the outstanding 50.13% was acquired for a total of $651,595,100. So what do the investment partners get for their $1 billion investment?
Office and retail space
The tower itself has 400,000 ft.² of office space which has been fully let to the National basketball Association, Richemont Group and MSD Capital (owned by Michael Dell). It is not known exactly what rental income this office space creates bit with such a prestigious real estate development the figures will be phenomenal. There is also 105,000 ft.² of retail space which has been taken up by the likes of Cartier, Amani, Versace and H Stern – so we are looking at the creme de la creme of the retail arena.
This is just the latest in a long line of high-profile, high value real estate ventures by the Chera family which now has stakes in an array of extremely high quality real estate investments.
Is the real estate market turning?
While there’s no doubt that there has been renewed interest in the US real estate market over the last few months, the fact is that opportunities such as the Olympic Tower on Fifth Avenue are very few and far between. If you delve a little deeper into the US high-end real estate market you will see the same names appearing time and time again. When you consider the cost of acquiring 100% of the Olympic Tower topped $1 billion that is certainly a vote of confidence in the market!
In some ways the ongoing aggressive acquisition strategies put in place by many high-profile investors rubberstamp the long-term potential for real estate. It is looking more and more as if long-term investors see the current economic issues, not only in the US but around the world, as a long-term buying opportunity. If this is the case, is it worth looking away from the high end real estate projects?
Have lessons been learnt?
Time will tell whether lessons have been learnt in the aftermath of the 2008 mortgage crisis which preceded the worldwide economic downturn. Even now, seven years after the initial crisis emerged, worldwide base rates are still rock bottom and many economies are struggling to move into positive territory. Against this background, some of the cash rich and more adventurous long-term property investors seem happy to cherry pick the better real estate assets in the hope of a more positive outlook in the longer term.