NEW YORK CITY—The Blackstone Group's core-plus fund, Blackstone Property Partners, has formed a joint venture with RXR Realty to recapitalize a 5.3-million-square-foot portfolio of office properties in New York City and New Jersey, Highlighted by the iconic 2.3-million-square-foot Starrett-Lehigh Building, which occupies an entire block at 601 W. 26th St., the portfolio is reportedly valued at $4 billion.

Also included in the portfolio are 340 Madison Ave., 620 Avenue of the Americas, 1166 Ave. of the Americas and 1330 Avenue of the Americas in Manhattan, as well as the University Square campus in Princeton, NJ. RXR will continue to operate the properties once the recapitalization is completed; it's expected to close in 60 days. Both companies will have a stake of about 50% in the portfolio.

“Our overall strategy has been to acquire irreplaceable assets in the best locations at substantial discounts to replacement costs and apply our real estate skills to create value,” says Scott Rechler, chairman and CEO of RXR. “This transaction will allow us to harvest value created in assets purchased between 2009 and 2011, while continuing to participate in the next level of value creation alongside Blackstone. We have a proven history of recycling capital into other value creation opportunities and plan to do so with proceeds from this deal.”

Eastdil Secured managing directors Doug Harmon and Adam Spies advised both Blackstone and RXR on the sale. To date, the open-ended BPP strategy has reached $4 billion since being launched a year ago, Blackstone's chairman and CEO, Stephen Schwarzman, said on the asset management giant's fourth-quarter earnings call last month.

The opportunity represented by the core-plus platform, spearheaded by senior managing director A.J. Agarwal, is “to bring our 'buy it/fix it/sell it' approach to an asset class where there's maybe not as much 'fix it,' “ Jonathan Gray, global head of real estate at Blackstone, told GlobeSt.com sister publication Real Estate Forum in September. “You're not going to be buying the same sort of public companies or mezzanine debt to get control. You're not going to be buying hotels. But there might be a need to buy a high-quality asset and do a little bit of leasing because there's some rollover down the road, or maybe a little refurbishment.”