Deal Marks Lower Manhattan’s Largest Office Investment and New York City’s Largest 100% Investment Transaction in Post-Covid Era
Landmark 50-Year Extension Reflects Confidence in Lower Manhattan’s Office Market
New Rent Structure Estimated To Contribute $1.9 Billion in Value, Including $1.5 Billion for Affordable Housing
The Battery Park City Authority (BPCA) today announced it has executed an agreement with Brookfield Properties to modify and extend the ground lease for Brookfield Place, a 9.4-million-square-foot office and retail complex located in Battery Park City. The agreement secures Brookfield Properties’ ongoing investment in Lower Manhattan for nearly another century and extends the ground lease term from 2069 to 2119.
Under the new lease terms, BPCA is projected to receive an estimated $1.9 billion in current value over the lease term, of which a projected $1.5 billion will be dedicated to the City of New York and for the Joint Purpose Fund to support the construction and preservation of affordable housing development citywide. The agreement represents the largest office investment in Lower Manhattan and is the largest 100 percent investment transaction in New York City post-COVID, underscoring the continued strength of the area’s office market, of which Brookfield Place comprises approximately 10 percent of total inventory.
“This agreement represents a resounding vote of confidence in the future of lower Manhattan while boosting critically needed affordable housing production across the five boroughs — two big wins for New York City,” said Battery Park City Authority Chair Don Capoccia. “Brookfield Place is downtown’s commercial anchor and through the innovative structure of the deal, we have secured its place in Battery Park City well into the 2100s. We thank our partners at Brookfield for their commitment to lower Manhattan and Battery Park City.”
“Forty years after the buildings of Brookfield Place were constructed, Battery Park City continues to serve as an economic anchor for Lower Manhattan, while also contributing nearly two billion dollars to affordable housing development across New York City for decades to come,” said Battery Park City Authority President and CEO Raju Mann. “This agreement reflects the commercial strength of Downtown Manhattan, and we are grateful to Brookfield for their long-standing commitment to this community and New York’s future.”
“This transaction affirms the rapid evolution of downtown Manhattan into a uniquely cosmopolitan area,” said CEO of Stacom CRE, Darcy Stacom. “Arts, culture, a dramatically improved waterfront, a residential population that has more than doubled and a smaller, more trophy, office market.”
BPCA owns the land in Battery Park City and has long term leases in place with the building owners in the neighborhood. In exchange for the lease extension, Brookfield has committed to higher ground rent payments which will primarily flow to the Joint Purpose Fund supporting affordable housing development throughout New York City.
The agreement establishes a rent schedule under which the City and State benefit from the economic performance of the buildings, replacing an earlier agreement that predated the complex’s proven commercial success. The revised structure reflects the strong current and anticipated performance of the complex under Brookfield Properties’ stewardship, aligns stakeholder interests, incentivizes continued capital investment, and enables the City and State to share in that commercial success, generating an estimated $1.9 billion of current value over the lease term.
The lease terms include a new rent structure that combines predictable annual increases with participation in the property’s long-term financial performance, thereby ensuring stable and growing revenues for BPCA over the lease term. As part of the agreement, BPCA has secured additional commitments designed to support the long-term vitality of Brookfield Place and the Battery Park City neighborhood.
Resiliency & Sustainability
Brookfield will advance emissions and waste reduction initiatives with a goal of reaching net zero emissions by 2050 and will enhance reporting on energy and waste usage.
Capital Investments
Brookfield has invested more than $900 million in Brookfield Place in the last 10 years and anticipates investing more than $100 million over the next several years in additional capital improvements to attract and retain top-tier tenants and ensure the property remains a premier Class A asset.
Community Benefits & Diversity Contracting
Brookfield will contribute up to $2.5 million for public realm improvements in Battery Park City; set aside up to 10,000 square feet of office space to be leased at-cost to nonprofit and community organizations; collaborate with BPCA on free, public programming to be hosted in the Winter Garden; and comply with New York State’s Minority and Women Owned Business Enterprises (MWBE) and Service-Disabled Veteran-Owned Businesses (SDVOBs) participation goals on capital contracts at Brookfield Place.
Located in Battery Park City, the four original towers of Brookfield Place were developed by Olympia & York as the World Financial Center between 1983-1988. Following Olympia & York’s bankruptcy in 1992, Brookfield Properties acquired a majority interest in the complex and later acquired 300 Vesey Street in 2013. Over the last decade, Brookfield has invested more than $900 million to modernize Brookfield Place, including renovations to the Winter Garden, construction of the east-west passageway connecting to the World Trade Center, and a comprehensive repositioning of the retail at Brookfield Place introducing dynamic new retail and dining offerings. In addition, Brookfield Properties has invested $220 million in modernizing office lobbies, mechanical systems and elevators and spent $40 million sustainability upgrades. Today, Brookfield Place is one of New York City’s premier mixed-use office and retail destinations, welcoming millions of visitors annually and home to tenants including Royal Bank of Canada, Jones Day, Cadwalader, Invesco, People Inc, and Jane Street.
BPCA owns the 92 acres that comprise Battery Park City, with all third-party owned buildings within the neighborhood on ground sub-leases with the Authority. BPCA’s financing structure supports both the Battery Park City neighborhood — funding maintenance of open spaces, neighborhood beautification and programming, and supporting debt service used to fund portions of BPCA’s capital projects — and the City of New York — contributing to both its General Fund and affordable housing initiatives citywide.
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