Posted: June 1st, 2017
The Qatar Investment Authority (QIA) – the sovereign wealth fund for the Middle Eastern nation of Qatar – adopted a direct investment strategy in 2008. This new emphasis resulted in a series of high-profile foreign acquisitions outside of Qatar, primarily in real estate. Real estate has featured prominently in QIA’s asset mix. Per a Preqin report from 2012, real estate made up 32% of QIA’s portfolio. However, QIA’s transactions slowed in 2015 as fuel prices slumped. (Learn more about Qatar and the QIA)
Qatar commits billions in U.S. assets
Rebounding from the oil price slump, QIA has regained its appetite for deals. Crucial to QIA’s revamped investment strategy are American real estate investments. With many of its major investments confined so far to Europe, QIA opened an office in New York City in late 2015 and laid out plans to invest $35 billion across all asset classes in the country by 2020 in order to diversify its holdings.
The plan has resulted in a series of high-profile acquisitions since October 2015. QIA was the fourth-biggest investor in U.S. office space in 2016, overwhelmingly in New York and Los Angeles. The fund in 2016 made substantial investments in New York City and has also moved into the Los Angeles real estate market in partnership with local property investor and manager Douglas Emmett, Inc. (NYSE: DEI).
U.S. Subsidiary in New York, Empire State Building investment
The Qatar Investment Authority incorporated a wholly-owned subsidiary called QIA Advisory (USA) Inc. in Delaware on 17 November 2014. Subsequently, QIA Advisory (USA) opened a New York City office in September 2015. A month later, QIA formed a joint venture with Brookfield Property Partners LP to develop Manhattan West, a $8.6 billion and 7 million square foot mixed-use project under construction on the far West Side of the city. Manhattan West is scheduled for completion in 2019. QIA will acquire a 44 percent stake in the project, but the price tag is unknown.
In August 2016, an unspecified QIA subsidiary made a $622 million investment in Empire State Realty Trust, the landlord that owns the Empire State Building among other properties. The investment represents a 9.9% stake in the Trust. The Empire State Building was seen as a trophy purchase.
Qatar partners with Douglas Emmett in Los Angeles
QIA’s spending spree has expanded to the west coast with a $2 billion investment in Los Angeles real estate with partner Douglas Emmett (NYSE: DEI). In March 2016, Douglas Emmett disclosed a joint venture deal with QIA. Subsequent reporting and press releases have also detailed the ambitious new partnership, which is purchasing properties from Mid-Wilshire down to Santa Monica.
The QIA-Douglas Emmett joint venture is currently attached to at least eight office properties in Los Angeles County.