General Motors Corp. this week plans to ask one or both of Detroit’s pension funds to invest in the Renaissance Center, its world headquarters in downtown Detroit.
GM executives are expected to make an investment pitch to the $4.3 billion Detroit Police and Fire Retirement System Thursday morning. GM also is trying to schedule a meeting with the $3.8 billion Detroit General Retirement System to seek help in financing about 80%, or $500 million, of the value of the corporate-owned building, as reported by The Detroit News.
GM spokesman Tom Wilkinson wouldn't confirm the exact amount but said the figure was “in the ballpark.”
Mr. Wilkinson said the search for a Renaissance Center investor began in May when GM’s previous lease expired and the company bought the building for $636 million. In this financial climate “the market for these sorts of deals is obviously tough.”
Detroit Mayor Ken Cockrel Jr. “has some concerns and wants to look at the specifics,” of any Detroit general and/or police-fire retirement system loans to GM, said Dan Cherrin, the mayor’s communications director Dan Cherrin.
“But the mayor said that ultimately it is up to the pension boards to make that decision,” Mr. Cherrin said.
The local funds have invested a reported $24 million in the Westin Book Cadillac Hotel, which reopened Monday in downtown Detroit.
GM executives said the company does not plan to leave the Renaissance Center, saying its corporate tenancy makes the landmark building an attractive investment for the funds, or any other investor.
Mr. Wilkinson said the money raised would go toward the roughly $4 billion that GM wants to raise by selling assets. Those assets are a part of a $15 billion liquidity plan that GM announced in July.
But Mr. Wilkinson said GM would be seeking investors for the Renaissance Center regardless of the liquidity plan.
“We would be looking to do this whether it was a period of great profits or not great profits,” he explained. “This is just standard procedure.”
The Big Three automakers are all facing cash crises that threaten their solvency in the face of dismal sales and a frozen credit market.
Patricia Scott is a reporter with Automotive News, a sister publication of Pensions & Investments. Amy Wilson and Robert Ankeny contributed to this report.
