Fosun Group

Chinese conglomerate Fosun’s UK affiliate acquires City of London’s Royal Exchange for US$58.4m

PUBLISHED : Friday, 05 October, 2018, 8:18pm
UPDATED : Friday, 05 October, 2018, 8:18pm

The UK affiliate of Chinese conglomerate Fosun International has acquired the iconic Royal Exchange in the City of London for £45 million (US$58.4 million).

Resolution Property has bought four floors of the building with 68,000 square feet of office space from European investment firm Marcol. The ground floor of the building was excluded from the sale.

The grade 1 building, completed in 1844, sits in the historic heart of the Square Mile near the Bank of England.

Market observers expect annual rental yield at Royal Exchange to fetch as much as 5.9 per cent.

Fosun acquired 60 per cent of Resolution Property for 15.6 million (US$17.9 million) in 2015 and uses the asset management company as a platform for property purchases in Europe.

A Resolution spokesman told the Post that the purchase of Royal Exchange involves investments from a third-party investor, and that Fosun was not involved.

In August, billionaire tycoon Guo Guangchang, Fosun’s co-founder, said that the company will continue to hunt for deals in the US, Europe and Africa to expand its global footprint.

“We believe our investments in the US will still be welcome, and we have seen more investment opportunities in Europe,” said Guo.

While the Chinese conglomerate has repeatedly emphasised that it will continue to hunt for overseas expansion, the company has toned down its overseas shopping spree since Beijing imposed a series of measures and policies tightening movement of capital out of the country.

The last overseas move made by Fosun was in February when it acquired a controlling stake in the 129-year-old French fashion house Lanvin.

In 2017, Beijing began subjecting companies that have made significant overseas investments to regulatory scrutiny. Fosun, along with Anbang Group, Dalian Wanda Group and HNA Group, was put under regulatory spotlight for borrowings racked up to fund its acquisitions.

Since then, Angbang, Wanda and HNA have been busy offloading overseas assets to comply with Beijing’s guidelines.

However, analysts see that while some companies with solid track record of making sensible overseas investments, can still get the go-ahead under the right circumstances.

“A lot of companies have been doing outbound investment for a long time. They have reputable local partners, do not overbid and have proved that their overseas investments are for the purpose of diversifying their portfolios for better returns,” said Paul Guan, partner in the real estate practice of Paul Hastings. “The door on overseas investments in real estate has not shut down.”