A risky roll of the dice made in the depths of the financial crisis a decade ago will begin to bear fruit next week for a small Canadian pension fund leading the biggest private real estate project in U.S. history.
“Those did not feel like cheap decisions. They all felt like we were paying too much and maybe the world was ending,” said Oxford president Michael Turner, who was still in his early days at the company when the deal was struck. “We happened to be able to be there as a sponsor of quality, with fortitude and a balance sheet to make a decision.”
On the Hudson Yards deal, a couple of Canadians teamed up quickly to make it happen. Tishman Speyer Properties LP, the initial winner of the Metropolitan Transportation Authority’s tender process to develop the area, withdrew its bid and Related came on shortly after. Goldman Sachs Group Inc. was Related’s former partner in the deal but the investment bank changed its focus from long-term plays and Oxford joined instead, Joanna Rose, a spokeswoman for Related said.
Oxford’s arrival at Hudson Yards went along with other bets it’s made in the past decade to expand to new territories despite looming uncertainty. The financial crisis hit just after the firm struck its first European deal to acquire 50 per cent and develop 530,000 square feet at Watermark place in London. That turned out to be a very “fortuitous, successful investment,” Turner said. Oxford bought the entire property in 2010.
They’re not the only ones looking to reap greater returns by looking outside Canada. For the past five years, publicly recorded commercial real estate investments abroad by Canadian pension funds was $84.6 billion, compared with $19.8 billion invested domestically, according to CBRE research. Ivanhoe Cambridge Inc., a unit of Caisse de Depot et Placement du Quebec, bought IDI Logistics in the U.S. in a US$3.5 billion deal last year and has recruited Oxford as a partner.
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