Allianz announced today that it has partnered with Alpha Asia Macro Trends Fund III (“AAMTF III”), a private equity investment fund managed by Singapore’s Alpha Investment Partners, and an unnamed co-investor to acquire an office park property in northern Shanghai.
The European financial giant and the private equity unit of Singaporean conglomerate Keppel Corporation have agreed to purchase Bay Valley C6, a Grade A office asset in Shanghai’s Bay Valley Business Park from CITIC Capital for an equity consideration for $48 million, according to a statement by Keppel Corporation.
Sources familiar with the transaction told Mingtiandi that the 19,768 square metre property was valued at RMB 28,500 ($4,4158) per square metre in the deal.
In a statement, Allianz, which purchased the asset through its Allianz Real Estate unit, indicated that the gross asset value of the 13-storey property is approximately $90 million. According to a statement from Keppel Corporation, the parent of Alpha Investment Partners, the fund paid an equity consideration of of $48 million for the asset.
The capital markets team at Cushman & Wakefield brokered the transaction on behalf of CITIC Capital, according to sources familiar with the deal.
According to an announcement by Keppel Corporation, Alpha Asia Macro Trends Fund III (AAMTF III) is taking a 48 percent stake in the asset, while Allianz will have a 41.5 per cent holding and the remaining 10.5 percent stake goes to an unnamed investor in the AAMTF III fund.
Betting on China’s New Economy
“This transaction is aligned with our approach of investing in China’s new economy, which has successfully transformed from a manufacturing-driven economy to a more balanced service-based economy,” Rush Desai, the Asia Pacific CEO for Allianz Real Estate said in the statement.
Bay Valley C6 is a Grade A office property located in the Bay Valley Business Park, in the New Jiangwan Town section of Yangpu district. Situated to the north of Shanghai’s downtown core, Yangpu, which is home to the new campus of the city’s elite Fudan University, which sits adjacent to the Bay Valley facility, has become a popular option for business park developments on the west side of the Huangpu River. Tishman Speyer’s project The Springs is also located in Yangpu and Shui On Land chose the district when it developed its KIC business park more than a decade ago.
Yangpu Business Park Becomes Investment Target
Bay Valley C6 is said to have “seen positive leasing demand,” according to the statement. “The acquisition of the strategically located Bay Valley C6, which is seeing growing demand from companies in the biomedical and technology, media and telecommunications sectors, is an excellent addition to AAMTF III, given the positive outlook of Shanghai’s technology industry,” Eric Goh, CEO for China at Keppel Capital, the parent entity of Alpha Investment Partners said in a statement.
No further details were provided on leasing of the project.
During the second quarter of this year, IDG Capital purchased Bay Valley B7 in the same complex from Shanghai SMI Holding, which developed Bay Valley, for RMB 726 million. That 28,000 square metre building was vacant when it was sold for the equivalent of RMB 25,900 per square metre, according to data from Savills.
Local investment firm Top Spring also chose Bay Valley for a series of acquisitions last year, picking up approximately 100,000 square metres of space in the project through its acquisitions of the A4/C4 and C7 buildings for a combined RMB 2.4 billion during the third quarter of last year.
The business park project was originally developed by what is now SMI Group, or Shanghai Municipal Investment Group, Corp starting in 2014.
Allianz Ties Up With Keppel Again
The acquisition marks the second time that Allianz has tied up with the Alpha-managed fund for an investment in China, after the investment duo teamed up with Alpha’s developer affiliate Keppel Land to purchase Soho Hongkou from Beijing-based Soho China for RMB 3.6 billion in June of 2017.
Allianz Real Estate has become increasingly active in the China real estate market since Rush Desai took the top APAC position with the asset manager just over two years ago.
In July the German finance firm’s real estate division purchased a business park asset in Beijing’s Zhongguancun area from Goldman Sachs and KaiLong for a price reported to be between $185 million and $196 million.
Just three month earlier, Allianz real estate had teamed up with a fund managed by Hong Kong’s Gaw Capital Partners to purchase a pair of buildings at Sky Soho in Shanghai’s Changning district for RMB 5.01 billion in April of this year.
Note: This story updates an earlier account which stated the transaction price as $48 million. The $48 million figure represents the equity paid by the buyers and does not take into account any debt financing for the deal.