Beijing-based private equity firm Sino-Ocean Capital is tapping the financial resources of one of the world’s biggest sovereign wealth funds to set up a $1.4 billion China office fund seeded with two projects acquired from parent Sino-Ocean Group.
The new fund, called Sino-Ocean Prime Office Partners I, will receive a collective $1 billion in committed capital from three limited partners, all of which are sovereign wealth funds or institutional investors, according to a Tuesday filing by Hong Kong-listed developer Sino-Ocean Group, which will contribute $400 million to the vehicle.
The fund will invest primarily in Grade A office projects in downtown locations in Beijing, including the two seed projects in the capital’s Chaoyang district: the Ocean Office Park complex and an under-construction office development known as Project Z6.
Sino-Ocean did not identify the limited partners in the fund by name, but sources familiar with the deal told Mingtiandi that among them is GIC, Singapore’s $744 billion sovereign wealth fund, which has made several large investments in China real estate this year. A financial institution linked to the Hong Kong government is also said to be participating.
Chris Wang, executive director of Sino-Ocean Group and CEO of Sino-Ocean Capital, said the group would use the establishment of the fund as an opportunity to promote the synergy of all parties, maximise the development of real estate assets and foster long-term cooperation with global investors to create greater return for shareholders and partners.
“We will, at the same time, acquire high-quality projects, accelerate asset turnover and ensure the steady and sustainable growth of business development and operating efficiency,” Wang said.
Ocean Office Park is a Grade A office complex at South Jinghua Street and West Jintong Road in the core area of Beijing’s central business district. Completed in 2009, the property has a gross floor area of 108,000 square metres (1.16 million square feet) and is currently owned by a property fund in which Sino-Ocean Group holds an indirect 50 percent interest.
Sino-Ocean’s wholly-owned Project Z6, a Grade A office development, broke ground in October 2020 on a 11,007 square metre site and will have a gross floor area of 128,000 square metres upon completion, according to the group’s 2020 annual report.
Also on Tuesday, Sino-Ocean Capital was revealed as the new controlling shareholder of SGX-listed Dasin Retail Trust’s manager after Zhang Zhencheng, chairman and controlling shareholder of the trust’s manager, completed the transfer of his shares, the trust said in a filing with the Singapore Exchange.
New Harvest, an affiliate of Sino-Ocean Capital, now holds 70 percent of the issued capital of Dasin Retail Trust Management, the filing said. The news came after Dasin Retail Trust in July announced that it was terminating a proposed sale to ARA Asset Management and pursuing a strategic partnership with Sino-Ocean Capital instead.
Faith in the Mainland
GIC’s latest bet on mainland real estate continues a string of capital commitments in China made by the Singaporean fund in recent years.
In August, GIC disclosed its $400 million commitment to a China logistics development fund set up by Hong Kong-listed ESR, targeting up to $4 billion in investment capacity.
In February, GIC teamed up with Hong Kong’s Kerry Properties on a joint venture to buy a piece of Shanghai land designated for a retail-led mixed-use development. After the duo won a bid for the Pudong site for a consideration of RMB 6.013 billion ($930 million), GIC will hold a 60 percent stake in the JV and Kerry the remaining 40 percent.
In August 2020, GIC and Singapore-listed Yanlord Land launched a joint venture to develop integrated commercial and residential property projects in high-growth cities across China. The JV, 51 percent held by Yanlord and 49 percent by an affiliate of GIC, aims to invest up to RMB 7 billion ($1 billion).
In February of last year, GIC revealed its acquisition of the LG Twin Towers in Beijing’s Guomao CBD from the Korean electronics group for RMB 8 billion ($1.15 billion), just three months after it bought out partner Beijing Capital Land’s half-stake in an office tower in the city’s Lize financial district for RMB 3.03 billion.
Note: This story has been updated to show that the planned gross floor area of the Z6 is project is 128,000 square metres. An earlier version indicated 27,000 square metres. Mingtiandi regrets the error.