Time Warner Sells Manhattan Office Space for $1.3 Billion

Time Warner Inc. confirmed Thursday it sold its office space at the Time Warner Center in Manhattan for $1.3 billion to developer Related Cos. and will lease back the office space until 2019.

Related and Time Warner were close to a deal but needed financing for the bid, The Wall Street Journal reported earlier this week. Two sovereign-wealth funds--the Government of Singapore Investment Corp. and the Abu Dhabi Investment Authority--have aided Related in purchasing the 1.1 million square feet of office space.

As part of the deal, Time Warner will relocate to a building that Related plans to develop in its Hudson Yards project on Manhattan's far West Side. Time Warner said it would acquire more than one million square feet of available commercial space in 30 Hudson Yards located at the southwest corner of 10th Avenue and 33rd Street.

The company expects about 5,000 employees from its corporate operations and its HBO, Turner Broadcasting, and Warner Bros. businesses to occupy the Hudson Yards space by the end of 2018.

Time Warner and Related have agreed to develop Hudson Yards and expect to finish the final building development documents in the first half of the year. Related hasn't completed financing for that building.

Time Warner spent about $520 million to construct its current headquarters about a decade ago. Chief Executive Jeff Bewkes said the move is an important step in the company's two-year long process to start consolidating its New York operations.

Thursday's deal marks one of the biggest in a surge of deals involving foreign investors in U.S. commercial real estate. Increased demand from overseas has helped drive U.S. commercial property values to record levels, particularly in major cities favored by global firms.

Foreign buyers are seeking out the U.S. as a place to spend their growing piles of cash, particularly as other markets such as Europe remain anemic. Non-U.S. buyers purchased more than $46 billion of property in 2013, up from $35 billion in 2012 and the most since 2007, according to real estate data firm RealCapital Analytics Inc.

Write to Everdeen Mason at [e-mail]

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