Gaw Capital Partners is confirmed to have sold the Pacific Century Place project in Beijing for approximately RMB 10.5 billion ($1.53 billion) according to sources familiar with the transaction who spoke with Mingtiandi.
The Hong Kong-based private equity firm completed the sale of the 169,900 square metre complex, which includes two office towers, a pair of serviced apartment blocks and a retail space, to a fund affiliated with mainland real estate agency Lianjia late last quarter, more than four years after purchasing the commercial complex from Richard Li’s Pacific Century Premium Developments.
The deal stacks up as the largest commercial real estate transaction in Beijing so far this year, according to statistics compiled by Mingtiandi, and was completed several months after Gaw Capital had started shopping around Pacific Century Place to potential buyers, with the talks with Lianjia first being reported by Bloomberg in June.
Gaw Gets $548M Markup After Upgrades
The buyer of the property in central Beijing’s Chaoyang district is said to be Beijing Yuanjing Mingde Management and Consulting Co, an asset management firm established in January of this year, where former Lianjia executive Tao Hongbing serves as legal representative. Beijing Yuanjing operates as a real estate-focused wealth manager on behalf of ultra-high net worth individuals, and is backed by Lianjia chairman Zuo Hui.
The reported selling price represents a mark-up of around $548 million over what the private equity firm had paid for the complex in Beijing’s Sanlitun area when it acquired the property on behalf of its Gaw Capital Real Estate Fund IV (GREF IV) for $928 million in April of 2014.
Gaw Capital Partners sold 100 percent of the fund’s interest in the property and the disposal took place shortly before another sale related to the Gaw Capital Real Estate Fund IV, with Allianz Real Estate having purchased a 50 percent stake in a portfolio of logistics assets held by a joint venture between Italian industrial developer Vailog and the Gaw fund late last month.
Sources at Gaw Capital declined to discuss specifics of the Mingtiandi regarding this latest reported transaction before the time of publication.
Lianjia Expands into Asset Management
According to recruitment advertising placed by the company in Beijing, Pacific Century Place’s new owner, Yuanjing Mingde, also known as Yuanjing Group, is Lianjia’s asset investment arm. In government filings reported by the South China Morning Post, Zuo Hui is shown to indirectly hold 72 percent of Yuanjing Mingde.
Since Lianjia, which is also known as Homelink, raised RMB 6 billion in 2016 from investors including Baidu, Tencent, Huasheng Capital and Source Code Capital, the company has been rapidly branching out into new businesses.
In January of this year, US private equity firm Warburg Pincus, together with Sequoia Capital China, and mainland tech giant Tencent led a RMB 4 billion investment into Ziroom, a rental apartment management unit of Lianjia. Then in September this year Lianjia was said to have raised $1.5 billion in funding from investors including Tencent and Warburg Pincus in the run-up to a Hong Kong IPO. However, the US private equity firm has since been said to have reconsidered its plans to invest $500 million in the round.
Gaw Renovates Retail Element
Gaw, which made its reputation renovating and repositioning properties such as Los Angeles’ Roosevelt Hotel, hired Hong Kong-based design firm Lead 8 to help add value to the retail portion of the circa 1995 property.
In a project which was completed in 2017 and which received a gold award for best refurbished building at the MIPIM Asia conference the same year, the renovation transformed the 75,000 square metre former department store component into “a pioneering, high visibility creative lifestyle workplace and experiential retail hub in the city.”
In addition to the refurbished retail component, Gaw renovated the public areas of office component of the property, including upgrading the lobby. The property has 45,000 square metres of grade A office space, which currently is available at asking rentals of RMB 360 per square metre per month, according to property listings posted by JLL.
With its relationship with Lianjia, which is mainland China’s largest residential brokerage, Yuanjing Mingde is said to be planning upgrades to the serviced apartment element of the project, which also has benefited from new metro lines connecting nearby subway stations to the rest of the city.
Jan Kot also assisted with research on this story.