New York’s Chrysler Building Bought by Abu Dhabi Fund

New York’s Chrysler Building, the Art Deco icon
that helps define the New York skyline, was bought by an Abu Dhabi
sovereign wealth fund, the second purchase of a Manhattan landmark by
Middle Eastern investors in as many months.
Rick Maiman

The skyscraper at 405 Lexington Ave., the world’s tallest building
until 1931, was acquired tuesday by the Abu Dhabi Investment Council for
an undisclosed price. Last month a Dubai fund, Boston Properties Inc.,
and Goldman Sachs Group Inc. paid $2.8 billion for the General Motors

Abu Dhabi, Kuwait, and other Persian Gulf countries flush with oil
revenue have taken advantage of falling prices to invest in real estate
and financial companies around the world. Middle Eastern investors have
spent $1.8 billion this year on commercial property in America, more
than other international buyers, according to Real Capital Analytics
Inc., a New York-based property research firm.

“We’re sending our money their way” to purchase oil, “and that money
is coming back and buying our assets,” a market analysis director at
Real Capital, Dan Fasulo, said.

Abu Dhabi Investment Council acquired the Chrysler Building from a
fund managed by Prudential Financial Inc., a spokeswoman for the Newark,
N.J.-based insurer, Theresa Miller, said. A spokesman for Tishman
Speyer Properties LP, Rick Matthews, 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 $800 million for the Chrysler
Building, said a person with knowledge of the transaction on June 11.
Abu Dhabi is the largest of the seven sheikdoms that make up the United
Arab Emirates.

The 77-story tower, designed by William Van Alen, was completed in
1930 on behalf of then-owner Chrysler Corp. and its founder Walter
Chrysler. At 1,046 feet, the Chrysler Building was the world’s tallest
skyscraper before it was surpassed by the Empire State Building a year

Much of the Chrysler Building’s façade is made of metal and its tower
has a tapered stainless-steel crown that supports a 185-foot spire. The
building is decorated with silver-colored hood ornaments that jut out
from its setbacks.

TMW Real Estate Group, an Atlanta-based investment company acquired
by Prudential, bought the Chrysler Building stake in 2001 for $300
million. It was the final property sold by Prudential from a series of
funds managed for German investors, mainly insurance companies, Ms.
Miller said.

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 Ave., a 1.5 million square-foot skyscraper for $1.8 billion. It
also divested the Lipstick Building, an elliptical East Side tower
designed by Philip Johnson, for about $649 million.

While New York office building prices have dropped between 10% and
15% 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%
after taxes,” she said.

Japanese investors spent $78 billion on American properties between
the late 1980s and 1995. Many of these transactions, including
Mitsubishi Estate’s 1989 purchase of Manhattan’s Rockefeller Center for
$895 million, came just before an American recession sent real estate
values plummeting. As a result, the Japanese investors lost an estimated
50% to 80% of their money during the period.

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