China Life Insurance Group has taken an undisclosed equity stake in New York City office tower 1285 Sixth Avenue in partnership with developer Scott Rechler’s RXR Realty. The $1.65 billion deal continues the recent overseas buying spree by China’s insurance giants, and is the latest in a string of US real estate acquisitions for China Life.
China Life and RXR acquired the 1.8 million-square-foot (167,000 square metre) building, which is also known as 1285 Avenue of the Americas and sits just a block away from Times Square, from JP Morgan Asset Management and AXA Financial who had owned the circa 1960 structure through a 50-50 partnership. Prominent tenants of the 51-storey tower include UBS Group AG and the white shoe law firm of Paul, Weiss, Rifkind, Wharton & Garrison.
The Wall Street Journal reports that UBS, which occupies half the building’s space, was a key to the deal. The company this month renewed its lease commitment through 2032, thus assuring the new owners of steady cash flow. Paul, Weiss eased the path for UBS, modifying its option to take more space in the building, freeing UBS to renew its commitment. In return for that concession, Paul, Weiss reportedly received an undisclosed stake in the building.
Joining the China Life/RXR Realty partnership in 1285 Sixth Avenue is New York developer David Werner, whose stake was also unspecified.
China Life Continues Streak of Overseas Deals
The Manhattan acquisition is China Life’s third major deal in the US, and its first in Manhattan, following just seven months after it invested $1 billion into logistics developer GLP’s US warehouse portfolio.
The state-owned firm, which is among China’s big five insurers with a reported $362 billion in total assets as of December 31st, 2015, also invested $250 million into Tishman Speyer’s Pier Four development project in April of last year.
China Life has also been active in London, where it took a 70 percent stake in the $1.35 billion acquisition of an office tower on Canary Wharf during 2014, and Hong Kong where it spent $755 million to buy a Kowloon office project in November last year.
Chinese Acquisitions Already Surpass 2015 Total by 50%
The China Life deal marks the second time this month that a Chinese insurer has made a major real estate acquisition in the North American market this month. Earlier, Anbang Insurance Group Co. reportedly was behind the purchase of InnVest, one of Canada’s largest hotel owners, making the purchase through subsidiary Bluesky Hotels & Resorts. Anbang has denied involvement in the deal, but the Wall Street Journal and Bloomberg News reported that the company was backing the purchase through Bluesky, an unknown company which only registered as a Canadian corporation in April and has no prior corporate track record.
The acquisitions by mainland insurers continue a buying spree that has made Chinese companies the biggest buyers of US real estate this year. To date in 2016, Real Capital Analytics reports that Chinese companies either have purchased or are buying 47 US properties worth more than $9 billion dollars, more than doubling the $4 billion invested by Canada dealmakers. The $9 billion figure also tops the 2015 total for Chinese investments, which clocked in at $6 billion, a figure representing 71 deals.