Carlyle Buys Downtown Shanghai Building from Forterra for US$266 Mil

Singapore-based Forterra Real Estate announced last week that it planned to sell its Central Plaza property for US$266.73 million, apparently to US-based private equity giant Carlyle Group.

Forterra Real Estate, is the trustee-manager of Forterra Trust and both companies were rebranded from their former Treasury Holdings and Treasury China Trust brands in February following their scandal-plagued separation from the bankrupt Treasury Holdings.

Forterra says that the expected net cash proceeds of US$127.34 million will be used to fund its development of its project “The HQ” in Shanghai as well as to pay off debt and boost its liquidity.

Carlyle has yet to comment on the reported transaction and was not named in the Forterra press statement, however, the US private equity giant was named as the buyer of the Central Plaza project.

Located on Huangpi Road near People’s Squqre, Central Plaza is a 19-storey grade A office tower above a three-level food and beverage podium with a total gross floor area in excess of 47,200 square metres.

Forterra is 40% owned by erstwhile Irish property barons Johnny Ronan and Richard Barrett, who split the company off from its parent firm in a controversial deal when it became apparent that Treasury Holdings would be seized by its creditors.

Forterra is not part of a liquidation of Treasury Holding assets currently underway in the courts of Ireland, however, the firm has assets linked to a vehicle called TAIL which are reportedly being pursued by Treasury’s liquidators.

Private Equity Returning to Shanghai’s Real Estate Market?

If the purchase by Carlyle materialises, it would mark the second time in the last six months that a major US private equity firm has bought a commercial real estate building in Shanghai.

Blackstone Group L.P. (BX.N) bought the 50,000-square-meter Huamin Imperial office tower and 5-star hotel complex in Shanghai during October last year. The Blackstone purchase has been valued at around $1.1 billion.

According to Reuters, Carlyle, a U.S.-based private equity firm with $170 billion in assets under management, acquired Central Plaza at a discount of around 8 percent to its value at the end of 2012.