Hong Kong private equity shop Gaw Capital Partners has agreed to sell the Cross Tower, a 24-storey commercial building in Shanghai, to a mainland real estate fund for a price believed to be RMB 2.66 billion ($402 million).
Gaw is flipping the Huangpu district building, which it bought in April 2013 and finished renovating and repositioning last year, to a core property fund controlled by local real estate private equity firm World Union Investment Management.
The price of the deal, as reported by market sources who spoke to Mingtiandi, represents a more than 59 percent jump over the reported RMB 1.67 billion ($270 million) price that Gaw paid for the asset less than five years ago, and values Cross Tower at RMB 63,800 ($9,639) per square metre of gross floor area.
The deal for the 42,000 square metre building has closed this month after being signed this past June, marking the fifth time the 1998-vintage asset has changed hands in the past 13 years.
World Union Closes Another Shanghai Deal
In this latest transaction, the Cross Tower is getting added to World Union Investment Management’s deal history in Shanghai, as the pioneering local real estate private equity firm continues to buy up office assets. Based in the mainland commercial hub, the fund manager first appeared on investors’ radars in 2014, when it led the acquisition of a Gensler-designed office tower in Xuhui district.
The investment manager has since gone on to buy up a succession of Shanghai office assets, including acquiring Crystal Tower, the office portion of the Crystal Galleria project at Jing An Temple, from Hong Kong’s Phoenix Property Investment in 2015.
Bund Area Tower Gets a New Owner — Again
Located at 318 Fuzhou Road, near the historic Bund waterfront, Cross Tower is known to many partiers as the home of M1NT Shanghai, a posh nightclub on the top floor. The building comprises 22 floors of office space above a two-storey retail podium, and is currently 85 percent occupied by tenants including Dun & Bradstreet and TNT China.
World Union intends to optimise the building’s tenant mix and boost occupancy to over 95 percent, Mingtiandi has learned.
Built by Singapore’s Pidemco Land starting in 1996 and originally called Pidemco Tower, the property was renamed after being scooped up by Goldman Sachs for RMB 800 million in 2004. The investment bank sold the tower to a fund managed by Germany’s SEB Investment and Singapore’s Pacific Star Group in September 2007, which in turn flipped the property to Ascendas China Commercial Fund (ACCF) in November 2010.
Gaw and Lead 8 Renovate 1990s Asset
The fund belonging to Singaporean property firm Ascendas (now Ascendas-Singbridge) sold on the building to Gaw in 2013. The investment firm chaired by Goodwin Gaw hired Hong Kong-based design studio Lead 8 to redesign the interior and architecture of the art deco-style tower, an effort that was completed last November.
“Cross Tower is located in a prime location of Shanghai, with a spectacular view over the Bund,” commented Gaw’s Humbert Pang, Managing Principal and Head of China in an exchange with Mingtiandi. “When we acquired the property, its external and internal finishes were quite outdated, and we’ve seen great value-add opportunity. After acquisition, we’ve refurbished the lobby and common corridor, and transformed Cross Tower into a modern, loft lifestyle office.”
“We think now it’s the right time to consider an exit,” Pang added.
Gaw Still Bullish on Shanghai
Gaw has been active in Shanghai for over a decade, with an investment strategy that focusses on revamping commercial properties. In October, a fund managed by Gaw bought the Sky Soho commercial project in Shanghai’s Changning district for a total of RMB 5.01 billion ($754.1 million). The 128,175 square metre mixed-use complex was sold by Beijing-based developer Soho China for a price that equates to RMB 39,072 per square metre.
“Our investment strategy remains the same, which is to acquire underused/undervalued properties that it can turn into trendy locations for shoppers, office workers and tourists,” Pang noted in reference to the deal. “We are confident with the future growth of Hongqiao Transportation Hub, where Sky SOHO is located.”
“We are optimistic about Shanghai’s long-term outlook. The key is to identify undervalued institutional quality assets or up-and-coming locations with potential,” he added.