Singapore investment group GIC ties up US$1.3b Time Warner deal

Singapore's GIC is partnering a group of investors to buy US$1.3 billion worth of Manhattan office space from Time Warner, as the sovereign wealth fund steps up its purchases of real estate where it sees increasing value.

GIC, which has signalled its investments are driven by opportunity rather than geography, has been buying up real estate in developed markets as property prices recover from lows hit during the 2008-9 financial crisis.

Just three weeks ago, GIC partnered British Land to buy London office and retail space from US private equity firm Blackstone Group for about £1.7 billion (HK$21.6 billion).

In its latest deal, GIC, together with a venture of the Abu Dhabi Investment Authority (ADIA) and US real estate firm Related Companies, will buy 102,000 square metres of office space in the Time Warner Centre at Manhattan's Columbus Circle.

The consortium will lease the office space until early 2019 to Time Warner, which is moving all its business units from HBO to CNN under one roof to save money.

"Economic data from the US and UK is getting a little more bullish, so GIC is trying to capitalise," said Chua Hak Bin, an economist at Bank of America Merrill Lynch in Singapore.

"Real estate has always been part of its diversified portfolio."

The World Bank this week raised its global economic expansion forecast for the first time in three years as growth picked up pace in developed countries.

The bank expects stronger growth in the United States in particular, at 2.8 per cent this year compared with 1.8 per cent last year.

GIC has also recently invested in Indian and Indonesian real estate, but the size of those deals pale in comparison to those in New York and London.

Real estate accounted for about 10 per cent of the fund's assets at the end of March, according to its last annual report.

In the report, it said "asset-specific conditions and risk are among the factors that influence investment decisions".

GIC ranks as the world's eighth largest fund with US$285 billion worth of assets, according to the Sovereign Wealth Fund Institute.

The institute ranks ADIA at No3 with US$627 billion worth of assets ranging from bonds of Citigroup to a stake in Britain's Gatwick Airport.

ADIA allocated 5 to 10 per cent of its portfolio to real estate and preferred to invest mainly through third-party fund managers or joint venture agreements, it said in its 2012 annual review.