PGIM Real Estate, a property investment affiliate of Prudential Financial, has sold two buildings at Waterfront Place, an office property in Shanghai’s Putuo District to Blackrock according to JLL which advised PGIM on the disposal.
The US alternative investment giant is paying around RMB 1.2 billion ($184 million) for Waterfront Place Blocks E and G, according to sources familiar with the transaction who spoke with Mingtiandi. The price for the pair of grade-A properties, which provide a total of 27,805 square meters (299,291 square feet) of office space, works out to approximately RMB 42,000 per square metre.
The deal for the 2009 vintage assets across from Changfeng Park in northwestern Shanghai is the second mainland China asset sale in just over a month for PGIM, and follows less than one year after BlackRock purchased the Shanghai Central Park office tower in the same district.
BlackRock Doubles Down on the Shanghai Office Market
Located in Putuo district, the property is a 20-minute drive, or three metro stations from Shanghai’s Jing’an Temple commercial hub. “The property is situated in a mature business area with further upside from ongoing improvements in infrastructure. It will have metro line 15 opening in two years nearby and a big regional shopping mall operated by Joy City” said Johnny Shao, Regional Director for Capital Markets at JLL.
Block E of the property is a 15-storey office building with a gross floor area of 21,193 square metres. The other building being sold, Block G of Waterfront Place, yields 6,643 square metres of GFA. The average occupancy rate for the two blocks is over 90 percent and average rental rates are around RMB 6 per square metre per day, Shao added.
BlackRock had most recently invested in the Shanghai office market in April last year, by buying Shanghai Central Park on Changshou Road in central Shanghai for RMB 1.37 billion ($199 million) from Hong Kong Shanghai Alliance Holdings Ltd.
The New York-based investment firm had recently registered as a private fund management company in China with the Asset Management Association of China at the end of last year. The move allows BlackRock’s Shanghai arm to sell investment products in the country to eligible institutional and high net worth investors.
PGIM Sells Second China Asset Since 1 December
PGIM Real Estate originally acquired the two blocks along Daduhe Road from ARA Asset Management in January 2016 for RMB 830 million ($127 million). That acquisition via PGIM’s Asia Property Fund III (ASPF III) came amid a $12 billion series of transactions worldwide by the firm that year. The Asia Property Fund III held a final close at $647.9 million in May 2016.
“We achieved an attractive entry price when we acquired Waterfront Place by capitalizing on market dislocation. In addition, an active asset management strategy, alongside increased demand from investors for income-yielding assets, enabled us to maximize the value of this investment,” said Benett Theseira, head of Asia Pacific for PGIM Real Estate in a statement to the press.
The Putuo district deal is the second major asset sale by the $1 trillion global investment management business of Prudential Financial in China in less than two months. In December, PGIM had sold a shopping mall in Guangzhou for RMB 3.36 billion ($511 million) to CapitaLand Mall Asia and CapitaLand Retail China Trust (CRCT). PGIM had purchased the then-unfinished project in the second quarter of 2012 for a reported RMB 2 billion, when the company was still known as Pramerica.