Alternative asset manager TPG, with nearly $13 billion in commercial real estate investment cash to spend, has made a major office purchase in New York.
Shortly after the second quarter ended, the firm completed “the acquisition of two adjacent high-quality office towers located on a full block of Park Avenue South,” Jon Winkelried, CEO of TPG, said on the company’s earnings call Wednesday.
“This is a top submarket in New York City, where favorable supply-demand dynamics have led to a significant improvement in office fundamentals,” Winkelried said.
The CEO did not disclose further details about the transaction on the call. TPG declined to comment to CoStar News.
TPG is among the institutional investors looking to grow their real estate holdings. The firm said it deployed $1.53 billion into real estate in the second quarter, up from $1.14 billion in the same quarter a year ago.
“In real estate, we continue to take a patient and disciplined approach to capitalize on the dislocation within the asset class,” Winkelried said on the call. “Over the last two years, we have acquired a number of high-quality assets that are typically unavailable from sellers facing liquidity pressure.”
Looking ahead, Winkelried said TPG expects to see a growing pipeline of attractive investment opportunities.
The New York acquisitions come after the firm signed one of Manhattan’s largest office leases last year, consolidating two existing offices into Tishman Speyer’s high-profile Spiral building at 66 Hudson Blvd.
Park Avenue recapitalization
In May, news outlets including Commercial Observer reported that TPG would lead a recapitalization of 225 Park Ave. S. Orda Management, the firm CoStar shows as the current property owner, did not respond to a request for comment.
Park Avenue South is part of the Gramercy Park office market, one of the best-performing areas in New York and across the United States, according to CoStar analysis. Leasing activity in the area has increased in recent quarters, echoing what is happening across New York.
New leasing volume in Gramercy Park last year was up more than 60% from 2023 and, more importantly, up almost 50% early this year from the same period last year, CoStar data shows.
TPG reported raising $216 million of new real estate capital in the second quarter, down from $370 million in the same quarter last year. The company’s real estate dry powder was also down year over year, ending the second quarter at $12.78 billion, down from $14.1 billion a year ago.
TPG reported its real estate portfolio appreciated about 3% in the second quarter and 14% over the past 12 months. It continued to see strong performance and value creation in its data center, industrial and residential investments.