Chrysler Building Bought By Abu Dhabi Sovereign Fund

Source : The Business Times, July 10, 2008

M-E investors are most active buyers of commercial real estate in the US

(NEW YORK) New York's Chrysler Building, once the world's tallest skyscraper, was acquired yesterday by the Abu Dhabi Investment Council, a Middle Eastern sovereign wealth fund, for an undisclosed price.

Iconic: The Abu Dhabi fund was set to pay about US$800m for the Chrysler Building

The sale of the Art-Deco building at 405 Lexington Avenue was the second this year of a landmark Manhattan property to a group that includes Middle Eastern investors.

Boston Properties Inc, Goldman Sachs Group Inc and investment fund Meraas Capital LLC of Dubai paid US$2.8 billion last month for the General Motors Building on Fifth Avenue, a record for a US office tower.

'We're sending our money their way' to purchase Middle Eastern oil, 'and that money is coming back and buying our assets', said Dan Fasulo, market analysis director at Real Capital Analytics Inc, a New York-based property research firm.

Abu Dhabi Investment Council acquired the Chrysler Building from a fund managed by Prudential Financial Inc, said Theresa Miller, spokeswoman for the Newark, New Jersey- based insurer.

Rick Matthews, a spokesman for Tishman Speyer Properties LP, which owns a minority stake in the tower, declined to comment.

Abu Dhabi Investment Council is prohibited by law from discussing its investments, an official said when contacted by telephone yesterday.

The Abu Dhabi fund was set to pay about US$800 million for the Chrysler Building, said a person with knowledge of the transaction on June 11.

The 77-storey tower, designed by William Van Alen, was completed in 1930 on behalf of then-owner Chrysler Corp and its founder Walter Chrysler.

At 319 metres, the Chrysler Building was the world's tallest skyscraper before it was surpassed by the Empire State Building a year later. Silver-coloured hood ornaments jut out from its setbacks.

The Chrysler Building stake was acquired for US$300 million in 2001 by TMW Real Estate Group, an Atlanta-based investment company acquired by Prudential.

It was the final property sold by Prudential from a series of funds managed for German investors, mainly insurance companies, Ms Miller said.

Middle Eastern investors have been the most active foreign buyers of commercial real estate in the US this year, spending about US$1.8 billion of a total of US$5.1 billion invested by overseas firms, according to Real Capital.

German investors ranked second, buying US$1.1 billion of real estate. These numbers don't include the Chrysler Building.

Prudential has been selling New York buildings it owned with Tishman to take advantage of gains in property values.

Last year it sold 666 Fifth Avenue, a 1.5 million square-foot skyscraper for US$1.8 billion.

It also sold the Lipstick Building, an elliptical East Side tower designed by Philip Johnson, for about US$649 million.

While New York office building prices have dropped 10 per cent to 15 per cent from last year's market peak, Ms Miller said Prudential's clients are pleased with the price.

'Our clients got annual returns of about 20 per cent after taxes,' she said. -- Bloomberg