A joint venture between Allianz Real Estate and funds managed by Alpha Investment Partners has agreed to invest €1 billion ($1.1 billion) to acquire a Beijing commercial complex from Warburg Pincus-backed developer D&J China, according to announcements by the companies.
The acquisition by the European insurer and the private equity unit of Singapore’s Keppel Group will give the joint venture an 85 percent stake in the Ronsin Technology Center, a set of six grade A office towers and a pair of accompanying retail podiums, in the Wangjing area of the Chinese capital’s Chaoyang district.
The deal for the 131,000 square metre (1.4 million square foot) complex is the largest commercial property transaction agreed to in Beijing since February of this year, according to Mingtiandi data, and is the latest in a series of joint ventures between Allianz and Alpha Investment Partners.
Investing in a New Wangjing Complex
Under the terms of the agreement between Allianz and Alpha, the European insurance titan is taking a 62 percent share in the JV with the remaining 38 percent held by Keppel Capital’s fund management division, acting on behalf of investment vehicles including the Alpha Asia Macro Trends Fund III. D&J, which was established five years ago by ESR co-founder Sun Dongping together with Warburg Pincus, would retain a 15 percent stake in the asset.
Located above the Laiguangying subway station on metro line 14 and completed just last year, the Ronsin Technology Centre is in Beijing’s Wangjing submarket, one of the capital’s core commercial hubs and home to many domestic tech start-ups.
“Beijing is demonstrating strong resilience to current volatility in the global markets while Wangjing is a well-established sub-market for technology and innovation firms, which is experiencing persistent demand with tight supply,” said Allianz’s Desai.
The asset is currently “in the stabilisation phase” and is 70 percent occupied, according to the insurer’s joint statement with D&J. Tenants lean heavily toward the domestic tech sector and include Snowball Finance, online grocery shopping platform Miss Fresh, software company SoYoung Technology, jobseeker platform Liepin, and fintech company 9F Group.
An Alpha spokesperson confirmed that rents at the complex are in line with current market rates, with comparable office projects in the area charging between RMB 9 and RMB 11 per square metre per day and retail rents standing at between RMB 6 and RMB 7.
Following the acquisition, which is expected to close before the end of 2019, Allianz, which is also an investor in AAMTF III, would manage the commercial properties jointly with Alpha and Shanghai-headquartered D&J.
At the agreed transaction price, Allianz and Alpha would be paying the equivalent of RMB 77,351 ($10,902) per square metre for the property in one of Beijing’s core commercial areas.
Taking Aim at China
The deal marks the latest in a series of big-ticket Asian acquisitions by Allianz over the past five months, as the company continues to expand its portfolio of property assets in the region.
“This is a continuation of Allianz’s investment strategy to allocate 50 to 60 percent of its Asia Pacific real estate exposure to fast-growing markets such as China and India,” said Allianz Real Estate’s Asia Pacific CEO, Rushabh Desai.
Alpha’s commitment with Allianz to the Beijing asset brings about the third major office investment in six months by AAMTF III, its pan-Asian value-add vehicle that closed on $1.1 billion nine months ago.
“The acquisition of Ronsin Technology Center will be AAMTF III’s first investment in Beijing and is in line with our strategy to expand Keppel Capital’s presence in China,” said Keppel Capital’s CEO, Christina Tan.
Just last March, the Alpha fund had teamed up with stable-mate Keppel Land and two additional co-investors to acquire the Yi Fang Tower in Shanghai’s Hongkou district RMB 4.6 billion. According to sources familiar with the deal, Allianz was not one of the co-investors.
In 2017 Keppel Land, Alpha and Allianz had teamed up to acquire the Hongkou Soho office project, also in Shanghai’s Hongkou district, from Soho China for $525 milion.
In September last year, Alpha had joined hands with Allianz to acquire a Grade A office asset in Shanghai’s Bay Valley Business Park from CITIC Capital at an asset value of approximately $90 million.
Marking a Milestone for Warburg Pincus-backed Startup
“We are very proud of Ronsin Technology Center, which has become one of the landmark assets in the Wangjing sub-market,” said Sun Dong Ping, D&J China’s chief executive officer.
The developer’s divestment comes just three months after Boston-based Bain Capital Credit committed $300 million to the company to help accelerate its growth.
That injection of capital followed earlier rounds of funding for the company over the past three years, with reports indicating commitments of at least $880 million into D&J China, led by Warburg Pincus.
The startup has channelled the capital into the development of its portfolio of business parks, manufacturing facilities, and data centres, as well as setting up funds to manage investments in its projects. According to D&J’s website, the developer has two other Beijing assets, in addition to the Ronsin Technology Center, with another 13 projects in the Yangtze river delta in Shanghai and Jiangsu province, plus one property each in Shenzhen and Chengdu.
Allianz Continues Its Shopping Spree
Allianz’s involvement in the deal continues an investment streak that has made the insurer one of the leading international real estate investors in India, Southeast Asia and Greater China since Desai was appointed to lead the company’s APAC efforts in late 2016.
Less than two weeks ago, the insurance giant purchased a Japan rental apartment portfolio from Blackstone for €1.1 billion.
In August, Allianz entered India’s office market with an agreement to invest $150 million in an office development platform set up by the country’s Godrej Group.
That deal followed the insurer’s participation in one of the largest Singapore acquisitions this year when it took a 60 stake in the S$1.5 billion purchase of the DUO Tower office building and the DUO Galleria mall, with Gaw Capital Partners taking the remaining 40 percent on behalf of an unnamed sovereign wealth fund.