UPDATE 1-Stake in NY Chrysler Building swapped to Abu Dhabi

Wed Jul 9, 2008 8:47pm BST

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(Adds building's history)

By Ilaina Jonas

NEW YORK, July 9 (Reuters) - The majority ownership of New York City's iconic Chrysler Building has been sold to the Abu Dhabi Investment Council, marking the second time in less than two months that a Middle Eastern fund took a major stake in a high-profile Manhattan office building.

Prudential Financial sold its 75 percent stake in the New York City building to the Abu Dhabi sovereign fund on Tuesday, a source familiar with the transaction said.

Tishman Speyer, which manages and controls the building, held the other 25 percent stake. A Tishman Speyer Properties spokesperson would not comment on whether they, too, had sold part or all of their interest in the building, located on 42nd Street and Lexington Avenue.

The fund paid about $800 million for Prudential's stake, another person familiar with the deal said. Prudential spokeswoman Theresa Miller declined to comment.

The sale of the building was motivated by timing restrictions in an investment fund Prudential has owned since 2002.

Prudential has been selling the fund's other high profile Manhattan office properties, including 666 Fifth Avenue and the Lipstick Building at 885 Third Ave., in the last year to close out the fund.

Manhattan's Cooper Union for the Advancement of Science technically owns the land and the building and leases it to Tishman Speyer under a 150-year lease that started in 1998, according to a spokeswoman for Cooper Union -- the only private, full scholarship U.S. college for architecture, art and engineering. Rent payments help fund the scholarships.

The Chrysler stake follows on the heels of another purchase by a United Arab Emirate buyer. Last month, Dubai-based Meraas Capital LLC, and Goldman Sachs Group Inc (GS.N) and Boston Properties Inc (BXP.N) bought the General Motors building.

The Chrysler Building, an American Art Deco skyscraper, was designed by William Van Alen who was in a race in the 1920s and 1930s to build tallest building in the world, said Neal Bascomb, author of the book "Higher: A Historic Race to the Sky and Making of a City." The book chronicles the competition between Van Alen and his chief adversary, H. Craig Severance.

The two had been partners in an architectural firm, a pairing that ended with a bitter break-up that included lawsuits and years of grudges.

"Van Alen was looking for design and making a piece of art, essentially," Bascomb said. "Severance was looking to make money."

Former senator William Reynolds hired Van Alen who stayed on the project after it was bought by Walter Chrysler, chairman and founder of car maker Chrysler Corp.

Van Alen's "final" design called for the building to be 925 feet high. But when he learned that Severance's Bank of Manhattan Tower, at 40 Wall St., would be 927 feet tall, Van Alen pushed the spire up and the building topped out at 1,046 feet.

But the Chrysler Building's title as the world's highest building was short lived. Just a few months later in 1931, The Empire State Building opened at 1,250 feet tall.

The Chrysler Building has changed hands several times since the Chrysler family sold it in 1953. (Reporting by Ilaina Jonas; editing by Patrick Fitzgibbons and Andre Grenon)

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