GIC Pte, Singapore’s sovereign wealth fund, is part of a group that’s buying the headquarters of Time Warner Inc. (TWX) in New York City, according to a person with direct knowledge of the transaction.
The person asked not to be named because the deal is private. Located at Columbus Circle in Manhattan, the property is a 2.8 million-square-foot (260,000-square-meter) twin-tower development that includes offices, restaurants and the Mandarin Oriental hotel, according to the Time Warner Center website. The building adjacent to Central Park was opened in 2004 and attracts more than 16 million visitors a year.
Related Cos., the New York-based lead developer of Time Warner Center, is in final negotiations to buy the media company’s 1.1 million square feet of space for about $1.3 billion and is bringing in partners on the deal, according to another person with knowledge of the matter. Sovereign funds globally are increasing allocations to alternative assets, including real estate, infrastructure and private equity, in an effort to diversify their investments.
“Assets like Time Warner Center are absolutely core and trophy in nature,” said Priyaranjan Kumar, the Singapore-based regional director of capital markets at property broker Cushman & Wakefield Inc. “Ownership in such assets assures investors of a durability of cash flows as these kind of properties always outperform the market during phases of recovery and prove very resilient even in downturns.”
The share of alternative assets in GIC’s portfolio has increased to 26 percent as of March from 23 percent five years ago, according to the fund.
The Time Warner Center investment is similar to the state fund’s purchase of San Francisco’s 101 California St. tower through another group last year, according to the person with knowledge of GIC’s investment. The building was valued at about $900 million, a person with direct knowledge of the matter told Bloomberg News in October 2012.
GIC declined to comment on the transaction in an e-mailed statement. Joanna Rose, a spokeswoman for Related, declined to comment on GIC’s investments. Keith Cocozza, a spokesman for Time Warner, declined to comment. A call to Martha Wallau, a spokeswoman for Eastdil Secured LLC, whose brokers Doug Harmon and Adam Spies are representing the media company in the sale of its space, wasn’t immediately returned.
After selling its space, the media company would move to a new skyscraper on Manhattan’s far west side, a person with knowledge of the negotiations said in July. The owner of cable channels would lease Time Warner Center back for five years, about the time it would take to build the tower at Related’s Hudson Yards project, the person said.
Time Warner has been searching for a more cost-effective real estate presence in New York, where its offices are spread among several Midtown buildings. Time Warner divisions with large Manhattan offices include the CNN news network, the HBO cable channel and the Time Inc. magazine business, which is being spun off.
State funds’ investments in alternative assets rose 26 percent in value in the past year, Invesco Ltd. (IVZ) said in September, citing a survey of 29 global sovereign wealth funds controlling about 80 percent of the assets.
GIC said last month it signed a pact to buy a 47-story office tower in Jakarta’s central business district. GIC also was the purchaser of Blackstone Group LP’s stake in London’s Broadgate office complex, two people with knowledge of the transaction said in August. GIC bought 50 percent of Broadgate, a cluster of 16 office buildings, shops and restaurants in the City of London financial district, according to the people, who asked not to be named because the deal is private.
China Investment Corp., the nation’s sovereign wealth fund, is in talks to buy a west London office development from Blackstone, a person with knowledge of the matter said earlier this month.
Norway’s state fund is seeking to increase the share of real estate in its portfolio to 5 percent from 0.9 percent at the end of September. The Kuwait Investment Authority is interested in resuming spending on London property, the U.K. capital’s mayor Boris Johnson said this week.
GIC’s U.S. assets increased to 36 percent of its portfolio as of March, from 33 percent a year earlier, the fund said in August. The U.S. economy was “furthest along” in recovering from the global financial crisis, it said at the time.
“Sovereign wealth funds by nature are relatively risk averse and seek steady long-term income,” Kumar said. “This translates into seeking investment opportunities that are largely insulated from vacancy or construction risks.”
Singapore’s Business Times newspaper reported the Time Warner Center transaction earlier today.
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