Brookfield Buying Pradera China Mall Portfolio From ADIA, Macquarie for $1.4B

Canada’s Brookfield Asset Management has made China’s biggest retail real estate acquisition since the dawn of the COVID-19 pandemic by purchasing a set of five mainland malls from joint ventures invested by the Abu Dhabi Investment Authority (ADIA) for $1.4 billion.

Brookfield last week signed sale and purchase agreements for the Mosaic-branded malls in Beijing, Shanghai, Chongqing, Xi’an and Qingdao, according to multiple sources who spoke with Mingtiandi, which when completed will give it possession of a portfolio that measures 260,000 square metres (2.8 million square feet) of gross leasable area.

The Mosaic acquisitions, which were first reported yesterday by PERE and confirmed to Mingtiandi by multiple sources, come three years after Brookfield bet on community retail in Shanghai with its investment in CCH Asset Management, and is part of a series of deals predicated on the rising affluence of China’s growing middle class.

Four of the five malls are managed by Pradera Retail Asia, a joint venture between the UK’s Pradera and Australia’s Macquarie Infrastructure and Real Assets, with the JV having co-invested in acquiring, developing and repositioning the Shanghai, Chongqing, Xi’an and Qingdao properties with ADIA. The Beijing property is operated under a separate joint venture with China Vanke.

Surviving Lockdown

The sale of the Mosaic portfolio mirrors China’s struggle with the novel coronavirus, with initial efforts to market the portfolio by Cushman & Wakefield together with JLL having just kicked off in December 2019 and January 2020 before getting stuck in lockdown with much of mainland retail during the first quarter of last year.

Discussions with interested investors regarding the portfolio, which continued throughout last year, went into the execution phase during the third quarter of 2020, before finally culminating in last week’s agreements.

Representatives of Brookfield, Pradera Retail Asia, ADIA, Cushman & Wakefield and JLL all declined to comment for this story.

Brookfield has continued to show confidence in retail globally, seeing caution by other investors as creating opportunities for yield. In April, the Canadian firm agreed to pay $459 million to buy a portfolio of seven UK shopping centres from Hammerson, as Great Britain continued to suffer from a lockdown which was only relaxed last month.

In 2019, Brookfield’s Shanghai-based head of Asia real estate Stuart Mercier made big waves in the office market with the $1.7 billion acquisition of the 154,500 square metre Greenland Huangpu Center in China’s commercial capital. The firm has since renamed the property as One East after completing the deal with Shanghai-based developer Greenland Group.

Community and Experiences

Pradera Retail Asia had first acquired what is now Mosaic Shanghai in 2017, with a team led by Pradera veteran Alison Rehill-Erguven and former Swire executive Rhys Evans rapidly converting what was once one of Shanghai’s earliest department stores into a youth-oriented retail destination along the East Nanjing Road pedestrian mall.

The joint venture later went on to acquire a former Tesco centre in Qingdao and a 102,000 square metre (GLA) regional mall in Chongqing, before upgrading those properties. The 47,000 square metre Xi’an property was developed by Pradera Retail Asia and opened to a crowd of around 60,000 people in late 2018.

Positioning for the malls in the portfolio has been aimed largely at the community’s served by the assets, with a 2019 makeover of the Chongqing property aiming the retail mix at families with young children, and adding experiences like a 3,000 square metre ice rink. In 2018, the East Nanjing Road property brought in the Shanghai Dungeon – an attraction operated by the UK’s Merlin Entertainment – as a way to draw tourists crowding the area around Shanghai’s Bund.