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Norges Bank Buys 45% Stake In BXP’s 900K SF Madison Avenue Office Project

The view of 343 Madison Ave. in July 2022, when the property was undergoing demolition.

Trillion-dollar sovereign wealth fund Norges Bank Investment Management is coming on board as Boston Properties’ partner on a 49-story office project in Midtown Manhattan.

NBIM bought a 45% stake in the planned development, a 900K SF commercial skyscraper near Grand Central Station at 343 Madison Ave., Bloomberg reported.

The developer revealed last month that it had a joint venture in place for the development but didn't disclose the identity of its new partner. The venture has signed a 99-year ground lease for the site with its owner, the New York City Metropolitan Transportation Authority.

The ground lease agreement requires the developers to build a new entrance to the Grand Central Station terminal, but plans aren't yet final. The partners reportedly have the ability to terminate the ground lease and receive reimbursement for costs associated with transit access, BXP executives said on an earnings call last month. 

Boston Properties didn't respond to Bisnow’s request for comment, and and NBIM declined to comment. 

Meanwhile, the $1.4T sovereign wealth fund is already a joint venture partner in New York City office properties, including Hudson Street offices leased to Google and 2 Herald Square.

The fund has billions to spend on properties across asset classes and is seeking to increase its U.S. holdings, particularly in Manhattan, NBIM U.S. Head of Unlisted Real Estate Investments John McCarthy told Bloomberg. Overall, the fund is hoping to allocate around 7% of its holdings to real estate, although it will be focusing on smaller office properties than the ones it currently holds.

“We will be acquisitive,” he told Bloomberg. “As challenges continue to persist and time goes on, better opportunities will likely present themselves.”

The Madison Avenue property has been the MTA’s since the agency bought the property in 1979, as well as adjacent sites in 1991, The Real Deal previously reported.

The MTA sought out bids to revitalize the property in 2013, moving to 2 Broadway in the meantime but continuing to pay approximately $4M per year for maintenance in the empty building. BXP won the contract in 2016 but was delayed by city questions over the property taxes owed by the developer.

Demolition of the property began in 2021 and wrapped earlier this year, according to New York YIMBY.