Goldman Sachs (GS), Abu Dhabi's ever-expanding investment arm and others have agreed to invest $1.4 billion into privately-held Related Cos., a deal that will allow it to continue investing despite today's less borrower-friendly climate. The deal, expected to be announced today, includes about $400 million from Goldman and Michael Dell's investment firm MSD Capital, giving them a 7.5% stake in Related. Abu Dhabi and Saudi company Olayan Group will invest about $1 billion, sources told the Wall Street Journal.
Related CEO Stephen Ross said the firm began seeking outside investors before the August credit squeeze that wrought havoc on mortgage-related securities. It "was so good we knew it wouldn't last," he said. "Deals are going to require a lot more equity going forward." Ross said the current capital infusion will allow his firm to diversify; it recently acquired the Equinox chain of fitness centers and a majority interest in retailer Virgin Megastores NA. Related was formed in the early 70s to build and develop government-subsidized housing, which it still does. It eventually expanded to developing high-end office and retail venues, including its crown jewel, the Time Warner Center. Together with Vornado Realty (VNO), it runs a $14 billion project in downtown NYC which involves building two train terminals and a new Madison Square Garden.
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