Blackstone Buys Vancouver's Bentall Centre From Anbang

Blackstone’s Nadeem Meghji hopes to makes a few upgrades to the Vancouver complex

Blackstone has teamed up with Los Angeles-based Hudson Pacific Properties to acquire the Bentall Centre in Vancouver from Anbang Insurance, a deal which opens a new chapter for the US private equity giant in its relationship with the now notorious Chinese insurer.

In a joint announcement late Wednesday Blackstone and its California counterpart indicated that they will renovate and potentially expand the 1.45 million square foot (134,709 square metre) commercial complex in central Vancouver, which Anbang had purchased in early 2016 for C$1 billion (then $729 million).

The buyers have not revealed a price for the transaction, which comes after Anbang was said to have put the Bentall Centre on the market in November 2018 as part of an asset liquidation program organised after Anbang chairman Wu Xiaohui was jailed earlier last year for fraud and embezzlement.

New Owners Plan Renovations for Vancouver Complex

“We are excited about the opportunity to enter the Vancouver office market with the acquisition of one of the city’s premier office complexes,” Nadeem Meghji, head of real estate for the Americas at Blackstone said in a statement. “This transaction represents a continuation of our global strategy of acquiring high-quality, well-located office buildings in high-growth, innovation cities around the world.”

The new owners have an option to add a new tower to the Bentall Centre in downtown Vancouver

Meghi indicated that Blackstone is making the acquisition through its Blackstone Property Partners’ core-plus open-ended fund and that the company intends to own and invest in the property for the long term.

In acquiring the four tower Bentall Centre complex, Blackstone has agreed to take an 80 percent stake in the joint venture with Hudson Pacific, which will hold the remaining 20 percent and act as the operating partner for the project, according to the announcement. Financial terms were not disclosed for the transaction, which is expected to close in the second quarter of this year.

Once the acquisition is completed, Blackstone and Hudson Pacific plan to renovate the project’s retail promenade as well as upgrade the indoor and outdoor common areas of the complex which had been developed at the intersection Vancouver’s Burrard and Dunsmuir Streets in phases which began in 1969 and ended in 1981.

Bentall Centre Fully Occupied with Option for New Tower

“We have always viewed Vancouver, with its proximity to Seattle, growing tech and media industries, high quality of life and favorable immigration policies as a natural expansion market for our office and studio portfolios,” Victor Coleman, chairman and CEO of Hudson Pacific said in the statement. “The acquisition will provide us with immediate scale in the city’s Financial Core, as well as the opportunity to create substantial value through Hudson Pacific’s tailored repositioning strategy, and the eventual development of additional premier office space.”

Anbang chairman Wu Xiaohui had been a frequent customer of Stephen Schwarzman’s Blackstone starting from the Waldorf Astoria deal

The purchase also affords the Blackstone-Hudson Pacific joint venture the option to build by-right another office tower in the complex – which the partners tout as one of the few remaining large-scale office development opportunities in downtown Vancouver.

The Bentall Centre’s four towers currently include 1.3 million square feet of office space, in addition to 140,000 square feet of retail space in the lower floors, which connect to the Burrard SkyTrain Station – a point of transit for over 44,000 passengers each day.

The office space is said to be 97 percent leased to tenants including Bank of Montreal, Deloitte Management Services, WeWork, CIBC World Markets, and Absolute Software.

The Bentall Centre acquisition is the latest in a series of joint ventures between Hudson Pacific and Blackstone. Including the $3.5 billion purchase of the former-Equity Office Properties San Francisco Peninsula and Silicon Valley office portfolio in 2015, the two companies have worked together on four transactions in recent years.

Blackstone Enters New Chapter in China Deal Story

Blackstone had been Anbang’s preferred partner for real estate investments from the time that the privately-owned insurer pushed onto the property world stage to buy the Waldorf Astoria hotel in New York from Blackstone-controlled Hilton Hotels for $1.95 billion in 2014.

As part of a 30-month, $16 billion cross-border acquisition spree, Anbang also paid Blackstone $415 million in 2015 to acquire the office portion of 717 Fifth Avenue in Manhattan, and in March 2016 agreed to a deal with the US private equity firm which resulted in the $5.5 billion purchase of 15 hotels from Blackstone’s Strategic Hotels and Resorts portfolio.

Anbang also purchased a hotel in Europe and stakes in Hilton Hotels from Blackstone before the mainland government put a stop to Wu’s acquisition run in 2017. The insurer had acquired the Bentall Centre from Canada’s Brookfield Asset Management in its first North American investment north of the lower 48 states.

The Vancouver deal marks the second time this month that Blackstone has purchased real estate assets from one of China’s recovering shopaholic cross-border investors after the private equity firm agreed on March 8^th to pay HK$7.02 billion ($894.8 million) to purchase developer Hong Kong International Construction Investment Management Group Co. Ltd (HKICIM) from HNA Group.