A piece of the Manhattan office tower that’s home to Fox News was sold yesterday by its Canadian owner at a 33% discount, a price that startled New York real estate experts.
Caisse de dépôt et placement du Québec, a pension fund that manages $330 billion in assets, agreed Wednesday to sell 49% of 1211 Sixth Ave. to RXR Realty at what Bloomberg News said was a $1.2 billion valuation. The previous valuation was $1.8 billion for the 2 million square-foot tower at West 47th Street, according to credit-rating agency KBRA.
CDPQ declined to comment on the sale, which comes when President-elect Donald Trump is threatening to raise tariffs on goods from Canada, a nation with many billions worth of pension wealth invested in U.S. assets. For instance, the Ontario Municipal Employees Retirement System is a partner with Related Cos. in Hudson Yards. CDPQ has $33 billion invested in real estate, about half in the U.S.
In addition to 1211 Sixth, where Rupert Murdoch’s family business has been a tenant since 1992, CDPQ’s New York portfolio includes the office towers 3 Bryant Park, 1411 Broadway and 85 Broad St. It’s also an owner of Stuyvesant Town and Peter Cooper Village, Manhattan’s largest apartment complex.
Heads are turning over the big property investor’s decision to sell when New York’s bruised office market is thought to be on the mend. In a report today Fitch Ratings said “some green shoots” are emerging.
“The hope is the market is bottoming out. No one wants to sell,” said Ruth Colp-Haber, chief executive of Wharton Property Advisors. But “it’s really burdensome to own an aging property now.”
Alexander Goldfarb, a commercial real estate analyst at Piper Sandler, said the partial sale of 1211 Sixth Ave. doesn’t necessarily reflect current market conditions. Large pension funds, he said, tend to move slowly.
“Decisions about office manifesting today may have been made six months ago,” he said.
The fund may have chosen to sell because it has some big bills looming. Specifically, a $1 billion mortgage is due next month for 3 Bryant Park, known as Salesforce Tower, and 1211 Sixth’s $1 billion loan comes due later this year. With banks demanding higher down payments for office loans, it makes sense for even super-creditworthy borrowers like CDPQ to stock up on cash.
CDPQ and Beacon Capital Partners acquired 1211 Sixth at a $1.8 billion valuation in 2013 and the fund bought out Beacon in 2016 at a similar valuation. After the sale to RXR the pension plan will control 51% of the building.
Developed in 1973, 1211 Sixth needs work. Colp-Haber said it might be the last Class A tower in Manhattan with subway-style turnstiles at security. RXR pledged to invest $300 million repositioning the property. The AIA Guide to New York City isn’t impressed with the building and similar ones near it, describing them as “posturing, bulbous boxes.”
RXR’s hefty investment that could pay dividends because 1211 Sixth comes with a valuable asset: An anchor tenant with a long-term lease. In 2022 Fox Corp. and News Corp. extended leases for nearly 1.2 million square feet until 2042. CDPQ described the combined lease at the time as the largest in more than three years. Under the old lease Murdoch’s minions paid about $80 a square foot for Fox News studio space and the Wall Street Journal newsroom.
They’re probably paying less now, which helps explain the building’s lower valuation, Colp-Haber said, though the long-term lease with Murdoch also makes it a better candidate for refinancing at an attractive rate. 1211 Sixth was 94% leased early last year but since then law firm Ropes & Gray said it would move out of 300,000 square feet in 2027 for space at 1285 Sixth, another RXR-owned building. In a press release, RXR said the law firm’s exit “creates a rare opportunity” to lease 600,000 square feet of space near Rockefeller Center.
In 2023, CDPQ opened a New York office and hired Tishman Speyer executive Michael Caracciolo to run it. The head of CDPQ’s real estate arm, Nathalie Palladitcheff, said at the time the fund was considering “all the ways in which we can enhance the resilience and performance of our portfolio.”
