Last updated: November 13, 2013 10:31 pm

Abu Dhabi and Singapore wealth funds invest in trophy Manhattan property

The Time Warner Center in New York©AP

Abu Dhabi and Singapore’s sovereign wealth funds will join developer Related Companies to acquire the Manhattan headquarters of media group Time Warner, the latest large property deal to be struck by foreign investors in New York.

Time Warner is selling its trophy 1.1m square foot offices at its namesake complex at Columbus Circle for $1.3bn as it seeks to move to a new skyscraper planned on the city’s far west side.

Abu Dhabi Investment Authority and Singapore’s GIC will each invest just over $300m, with additional equity from Related, people familiar with the matter said. Debt investors will also help finance the deal.

Sovereign wealth funds are seeking to diversify their risk by expanding investments beyond stocks and bonds into alternative assets, including real estate, infrastructure and private equity.

Norway’s sovereign wealth fund announced in September it had agreed to buy a 45 per cent stake in a midtown Manhattan skyscraper from Boston Properties for $684m in cash as it expands its property holdings in the world’s largest economy.

Since the financial downturn high-quality properties, typically leased by premier tenants, have been sought out as more defensive investments, given supply constraints, high barriers to entry and resilient rental rate growth.

“There is an onslaught of new capital coming from foreign investors and sovereign wealth funds to the US. When you have billions of capital to invest you’re looking for scale which is why these types of large transactions are attractive,” said Dan Fasulo, managing director at Real Capital Analytics, a commercial property group.

“Columbus Circle is one of the best corners to own an office in the world and there will be an exciting opportunity for investors to re-tenant the property once Time Warner moves out,” he added.

ADIA has been a leading buyer of US property, particularly hotels, but often invests alongside other parties.

Columbus Circle is one of the best corners to own an office in the world and there will be an exciting opportunity for investors to re-tenant the property once Time Warner moves out

- Dan Fasulo, managing director at Real Capital Analytics

GIC last year invested in an office tower in San Francisco’s financial district, and in March acquired the Grand Wailea on the Hawaiian island of Maui and four other resorts from a group including Paulson & Co for $1.5bn. GIC’s involvement in the Time Warner transaction was first reported by Singapore’s Business Times.

Time Warner will continue leasing its existing office space for at least another five years. The move to the Hudson Yards site – a $15bn development led by Related – would unite its businesses and staff from about a dozen smaller premises around New York, including its HBO, Turner and Warner Bros divisions.

Related, Time Warner, ADIA and Douglas Harmon, property broker for Eastdil Secured, who advised on the transaction, declined to comment. GIC could not be reached for comment.

Additional reporting by Camilla Hall

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