Fosun Acquires London’s Royal Exchange for £45M

Fosun International added another iconic London property to its portfolio on Wednesday, with its majority-owned Resolution Property acquiring the Royal Exchange in the City of London, media reported on Wednesday.

The transaction price for the 16th century financial landmark was £45 million ($58.4 million) according to a listing of the deal by brokerage Michael Elliott, one of two firms appointed earlier this year to market the building.

The deal for the freehold property is Fosun’s latest major outbound real estate acquisition this year as billionaire Guo Guangchang’s Shanghai-based investment group inches its way back onto the world stage.

Fosun Buys 500-Year-Old London Icon

Resolution paid the equivalent of £661.54 per square foot for the grade I listed office building including 68,023 square feet (6,319.5 square metres) of office space. Some 50,000 square feet of retail and restaurant space on the ground floor were not included in the sale after being sold off to OMERS’ Oxford Properties in December 2013 for £83 million.

In February 2016, vendor Marcol had been reported to be seeking bids of over £55 million for the property overlooking the Bank of England and in March of this year, Cushman & Wakefield and Michael Elliott were reported to have been instructed to sell the building for £47.5 million. A number of Chinese banks are located nearby, including Bank of China and the Agricultural Bank of China.

Fosun’s acquisition of the current Royal Exchange, which opened in its current form in 1844 on a site it has occupied since 1571, comes after the Shanghai firm bought Milan’s century-old Palazzo Broggi in 2015, and the company added Moscow’s historic Voentorg building in early 2017. The company made its big splash in the US in 2013 by purchasing Chase Manhattan Plaza in Manhattan for $725 million, which it has since renamed as 28 Liberty.

Upgrading in the UK

The deal marks Resolution Property’s first acquisition in the Square Mile of the City of London, with the company saying on Wednesday that it will undertake asset management initiatives to “deliver value from the underutilised space including proactively refreshing the tenant mix”.

The £47.5 million price reflected a yield of 5.63 percent and GBP per square foot capital value. At that time, offices were let at an average of £46.64 per square foot, with 4.5 years remaining until tenant break options for leases. Resolution were advised on the acquisition by Estate Office and Norton Rose Fulbright.

After Fosun purchased the Lloyd’s Chambers building in London for £64.5 million in 2013, the company acquired a 60 percent equity interest in real estate capital management company Resolution Property for EUR 15.6 million in June 2015, stating that it would become its priority platform for real estate investment in Europe.

In 2016, Resolution Property Investment Management, a joint venture between Fosun and Resolution spent almost GBP 300 million acquiring Thomas More Square in March 2016.

According to its interim report released last month Fosun’s real estate funds and asset management platforms managed some RMB 90.1 billion at end June, up from RMB 88.7 billion at end 2017.

These include Resolution Property Investment Management LLP along with Japanese real estate capital management company IDERA; French listed real estate fund management company Paris Reality Fund SA; Russian real estate asset management company Fosun Eurasia Capital Limited Liability Company; and Brazilian fund asset management company Rio Bravo.