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China property

Blackstone buys Shanghai office and mall project from Singapore’s Mapletree Investments for US$1.25 billion

  • US investment firm Blackstone’s acquisition is one of the largest property transactions in Shanghai
  • Acquisition is the latest in a series of investments by overseas buyers
PUBLISHED : Friday, 21 December, 2018, 8:02am
UPDATED : Friday, 21 December, 2018, 2:01pm

The Blackstone Group has bought an office and retail complex in Shanghai from Mapletree Investments of Singapore for about US$1.25 billion – the latest mega deal in China’s commercial property sector clinched by offshore investors.

The US investment firm, founded by the billionaire Steve Schwarzman, has completed the purchase of five office blocks and the mall, known as Mapletree Business City Shanghai and VivoCity Shanghai, comprising 270,000 square metres in the southwestern district of Minhang, according to two sources close to the deal.

The transaction underscores Blackstone’s confidence in China despite the softening real estate market and slowing economy.

On December 12, a consortium comprising Blackstone, US investment bank Goldman Sachs and Hong Kong-based property management firm Gaw Capital Partners bought 12 shopping centres in Hong Kong for HK$12.01 billion (US$1.5 billion).

Blackstone and Mapletree, an Asia-focused real estate investment and capital management company backed by Temasek, were not available for comment.

Mapletree undertook the 5.5 billion yuan development in 2012. The five-storey mall VivoCity Shanghai, named after VivoCity Singapore, officially opened last year.

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It has replicated the VivoCity Singapore experience in Minhang and has turned the entire fifth floor into a 10,000 square metre open-air Sky Park, comprising three interactive corners – Adventure Park, Sky Farm and VivoClub. These includes outdoor entertainment areas, VIP lounges and cinemas.

Blackstone will rebrand the mall as Westlink and expects it to be completed in the first quarter of next year, the source said.

Zhang Ping, executive director at the International Federation of Finance and Real Estate, said that this was a good deal for Blackstone.

“The headline price of 32,000 yuan per square metre [total cost divided by gross space area] is lower than the 35,000 yuan average office price in Minhang district,” she said. “Blackstone typically buys at a discount.”

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She noted that since the property is away from the city centre and there is no dearth of similar projects nearby, it could pose a challenge for the new management.

But multinationals and real estate funds are scouting for alternative office locations and decentralised malls that have rental growth potential, said one of the sources, adding that the slowdown in the mainland’s real estate sector is opening up more acquisition opportunities.

Link Reit sells a dozen suburban Hong Kong malls to consortium led by Gaw Capital for US$1.53 billion

Last month, Singapore-listed property company CapitaLand and the city state’s sovereign wealth fund GIC teamed up to acquire the Star Harbour International Center in Shanghai for 12.8 billion yuan (US$1.86 billion) from state-owned Shanghai International Port Group.

And earlier this month, Hony Capital, the private equity arm of Hong Kong-listed Legend Holdings, partnered with Boston-based AEW Capital Management to buy a landmark building in central Beijing for about 5 billion yuan.

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