QAI JVs with Brookfield, Takes Stake in Manhattan West

By Gail Kalinoski, Contributing Editor

One month after opening an office in New York City, Qatar Investment Authority is taking a 44 percent stake in one of the city’s largest mixed-use projects, the $8.6 billion Manhattan West development, becoming the latest foreign entity to invest in Manhattan commercial real estate.

Qatar’s sovereign wealth fund, which also said last month it planned to invest over $35 billion in the United States over the next five years, entered into a joint venture with a subsidiary of Brookfield Property Partners, L.P., which is developing the five-building, 7 million-square-foot project on the Far West Side.

“We are pleased to expand our relationship with Brookfield and invest in this world-class project. This joint venture is an example of our strategy to invest in high-quality real estate with strong partners. It is also a further demonstration of QIA’s long-term confidence in the U.S. market,” Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, CEO of Qatar Investment Authority, said in a prepared statement.

QIA and Brookfield have teamed up before, acquiring London’s Canary Wharf Group and its parent Songbird Estates earlier this year.

“Brookfield has enjoyed a long-standing, successful relationship with QIA and we are thrilled that they share our vision for this transformative project,” Bruce Flatt, CEO of Brookfield Asset Management, said in a prepared statement.

Ric Clark, CEO of Brookfield Property Group, noted in a prepared statement that the sale “of an interest in Manhattan West is consistent with our strategy of actively recycling capital by partnering with leading institutional capital providers.”

The project, which is bounded by 31^st and 33^rd streets and 9^th and 10^th avenues, broke ground in January 2013, when construction of a 120,000-square-foot platform began over the Hudson rail yards. It has now expanded to include several phases including One Manhattan West, a 67-story, 2 million-square-foot office building under construction that will be anchored by law firm Skadden, Arps, Slate, Meagher & Flom L.L.P., when it is completed in 2019.

The other phases are: Two Manhattan West, another 2 million-square-foot office building that will begin construction when One Manhattan West is fully leased; Three Manhattan West, a 62-story luxury residential under construction that will have 844 apartments when completed in 2018; Four Manhattan West, a hotel or more residential units; Five Manhattan West, a 1.8 million-square-foot office building formerly known as 450 W. 33^rd St. that is undergoing a $350 million redevelopment. Brookfield said it has signed leases totaling more than 400,000 square feet with technology and media tenants bringing the current occupancy to 90 percent.

Manhattan West will also have a two-acre public park, which will create a pedestrian thoroughfare, and about 200,000 square feet of retail, restaurants and other amenities.

It is part of the burgeoning Hudson Yards district on Manhattan’s Far West Side that recently saw the opening of a new train station at 34^th Street-Hudson Yards for the 7 subway line extension. Another mega-development is also coming to fruition in the area – the $20 billion, 28-acre mixed-use project known as Hudson Yards being built by Related Cos. and Oxford Properties Group. The first skyscraper, 10 Hudson Yards, a 52-story, 1.7 million-square-foot tower that will be occupied by tenants including Coach Inc., L’Oreal USA, SAP and VaynerMedia, is scheduled to open next year. In other Hudson Yards news, global investment firm KKR & Co. agreed this week to purchase the top 10 stories, 343,000 square feet, at 30 Hudson Yards, a 90-story tower that will have 2.6 million square feet when it is completed in 2019. It is the second commercial office tenant to invest in the property. In January 2014, Time Warner Inc. agreed to buy 1.5 million square feet of space at 30 Hudson Yards.

Kuwait Investment Authority, also a sovereign wealth fund, is one of the investors in Hudson Yards. Reuters recently reported that Hudson Yards has also received about $600 million from Chinese investors under the EB-5 program and also expects to raise a similar amount from other foreign investors.

Asian investors have also been making waves in Manhattan real estate in the last year with Anbang Insurance Group Co. Ltd. making the biggest splash with its $1.95 billion purchase of the Waldorf Astoria New York last October. In early June, Lotte Group, a South Korean conglomerate entered into a contract with Northwood Investors to buy the New York Palace Hotel for $805 million.

Fried Frank acted as counsel to Brookfield Property Partners in ithe joint venture and as part of the transaction, Brookfield will sell 44 percent interest in the development to QIA. Also working on the matter were real estate partners Joshua Mermelstein, Tal J. Golomb and Laurinda Martins; corporate partner Lee S. Parks; real estate special counsel Joel London; and corporate special counsel Andrew Silberstein.