Published June 17, 2008

NY skyscrapers may go to foreign investors

The weak US dollar has made the landmarks attractive to overseas buyers

(NEW YORK) The iconic Chrysler and Flatiron skycrapers may soon join New York's GM Building as landmarks sold in part to Arab or European investors as the weak US dollar spurs property grabs in the Big Apple, reports said last Friday.

On the block: The Chrysler Building (left) and Flatiron Building (right) are up for sale

The 50-story General Motors Building, constructed in 1968 and which includes the Apple Store on Fifth Avenue, has already been sold - for a record-breaking US$2.8 billion - to US real estate firm Boston Properties, backed by investors from Dubai, Kuwait and Qatar.

The deal, concluded last Tuesday, makes the GM Building the most expensive skyscraper in the United States, according to several reports.

The seller, Macklowe Properties, had been mired in debt after acquiring seven major New York properties last year for US$7 billion near the height of the real estate boom, before the subsequent real estate and credit crises.

According to The Wall Street Journal, the famed Chrysler Building could be next with the Abu Dhabi Investment Authority, a sovereign wealth fund, in talks with a subsidiary of Prudential Financial Inc to pay US$800 million for a 75 per cent stake in the Art Deco treasure.

Current owners Prudential and Tishman Speyer would not confirm or deny the report.

The midtown Manhattan trophy property was briefly the tallest building in the world when it was completed in 1930 until it was eclipsed the next year by the Empire State Building.

Prudential inherited the 75 per cent stake in the tower when it purchased TMW Real Estate Group in 2002. TMW had bought its stake in the building the year before for US$300 million.

The Abu Dhabi Investment Authority, one of the world's largest sovereign wealth funds, bought into US banking giant Citigroup, paying US$7.5 billion in November. It also acquired a substantial interest in home builder Toll Brothers, according to The New York Times.

An increased ownership stake in the Flatiron Building, built in 1902 as one of the first steel structures in the city, would be a feather in the cap of one of its shareholders, Italian building investor Valter Mainetti.

Through his Sorgente Group, Mr Mainetti would acquire 53 per cent of the building for approximately US$95 million, Time magazine reported.

Upheaval in the US real estate market has led to price drops in most regions of the country, and Mr Mainetti suggested that the weak US dollar made the triangle-shaped landmark particularly attractive.

'The Flatiron is expensive, but with the (cheap) dollar, it made sense to increase our share,' Mr Mainetti said in Time.

The euro was valued at US$1.54 last Thursday, compared with 1.33 a year earlier.

Mira Matic, a spokesperson for the property's owner, Newmark Knight Frank, confirmed that the Sorgente Group was in talks to raise its stake in the building, but 'terms haven't been agreed upon and a contract hasn't been drawn', she said. -- AFP