Bouwinvest and MacFarlane Invest $750M in NY and CA High-Rises
New York City and Los Angeles can expect more residential apartment buildings, as another international team focuses in on the desirability of their locations.
NEW YORK CITY—Dutch institutional investor Bouwinvest Real Estate Investors and the US real estate investment management and development firm, MacFarlane Partners, have formed a joint venture to own and operate newly built residential high‐rises in New York and Los Angeles that have a combined total value of $750 million.
The joint venture’s two investments are (1) a partial equity interest in Level BK, a 40‐story rental apartment tower in Brooklyn, NY, completed earlier this year, and (2) full ownership of the 24-story Park Fifth rental apartments currently under construction in downtown Los Angeles, CA.
Level BK is situated on the Williamsburg waterfront at 2 North Sixth Place and comprises 554 apartments. The property is adjacent to an East River Ferry terminal and the East River State Park, which hosts Smorgasburg, a weekly food market that attracts thousands of people to Brooklyn each weekend.
The Brooklyn multifamily property was developed by Jeffrey E. Levine’s New York-based Douglaston Development, in partnership with MacFarlane and AIG Global Real Estate. Both Douglaston and AIG Global Real Estate will continue to be equity partners in the property alongside the new Bouwinvest‐MacFarlane joint venture. The equity interests held by each party and construction costs were not disclosed. Construction began in September 2014 and was substantially completed in July of this year.
The Park Fifth high‐rise comprises 347 apartment units and 5,300 square feet of retail space. It is located at 427 W. Fifth St. It is across from a downtown Los Angeles public space, Pershing Square, and the Millennium Biltmore Hotel. MacFarlane is developing the project adjacent to one of its seven‐story rental‐apartment buildings that the firm is also constructing. The Park Fifth building broke ground in March 2017.
Both Los Angeles properties are expected to be completed during the first half of 2019. They have been developed as assets of MacFarlane’s Urban Real Estate Fund III, a privately offered commingled fund that has invested in real estate development projects nationwide and in which Bouwinvest is a partner. The construction costs were not disclosed.
“The new joint venture with MacFarlane Partners is the spearhead for Bouwinvest’s strategy of expanding its investments in North America through co‐investments and joint ventures as we target lifting our assets under management in these markets to €1.5 billion by 2020,” says Gijs Plantinga, Bouwinvest’s director of Northern America investments. “The residential sector with its positive market fundamentals, driven by US population growth, sits at the center of this core investment strategy.”
Under the new venture, Bouwinvest and MacFarlane significantly increased their equity investments in both properties. Bouwinvest’s North American investments are part of a broader international growth strategy where the institutional investment manager is also expanding across Asia‐Pacific and European markets to raise the proportion of real estate assets held outside its domestic Dutch home base to 40% of the total portfolio. Within the Netherlands, Bouwinvest manages its assets in‐house, and internationally it is aiming to do more direct investments with local operating partners such as MacFarlane.
Through its urban real estate program, launched in 1996, after developing, renovating and repositioning properties, MacFarlane typically has sold its and its partners’ interests in properties. Headquartered in San Francisco, with a regional office in Los Angeles, the company has invested in properties across the US.
The new venture is part of MacFarlane’s strategy to keep some of the assets that it has created, enabling the firm and its capital partners to retain and increase their equity ownership interests in selected development projects after those projects have been completed.
“We have helped create a generation of institutional‐grade, core properties in major urban markets such as New York, San Francisco, Los Angeles and Washington, DC,” says Victor B. MacFarlane, chairman and CEO of MacFarlane Partners. “Now we and Bouwinvest will look to benefit from the income and appreciation gains that long‐term ownership of high‐quality assets located in top‐tier US markets can deliver.”