Anbang Insurance, which last year paid a record $1.95 billion for New York’s Waldorf Astoria hotel, is reportedly on the brink of buying London’s Heron Tower for £750 million ($1.16 billion).
The acquisition of the 46-storey London landmark, which is now officially named 110 Bishopsgate, would be the first European real estate deal for the Chinese insurer. Besides its Waldorf deal and other real estate acquisitions, Anbang also last week bought a Belgian insurance firm for $226 million, and received regulatory approval from the Chinese government to pick up a Dutch insurance firm for $165 million.
Anbang’s latest trophy buy, which has been reported as imminent by London’s Estates Gazette and Bloomberg, comes as China’s insurance companies accelerate overseas real estate acquisitions. The investment wave follows relaxation of controls on capital leaving the mainland, and compression of investment yields in the country’s slowing domestic property market.
Anbang Seeks a Bookend for Its New York Landmark
While the four-year-old Heron Tower lacks the history of the Waldorf Astoria, the 230 metre (755 ft) building is the tallest in the City of London financial district, and the third tallest in the UK.
Should Anbang’s reported bid for the 40,877 square metre (440,000 square foot) office tower be accepted, the sale would represent a coup for UK developer Gerald Ronson and his partners in the project, Oman’s State General Reserve Fund and Saudi Arabia’s Prince Abdul Aziz bin Fahd. Just two years ago the Heron Tower was nearly forced into a sale and needed to refinance after initial leasing demand proved weaker than expected.
In October of 2013, US private equity group Starwood Capital saved the project from the threat of receivership with a $463 million refinancing facility. The building is now said to be 90 percent leased or under offer.
China’s Insurers Continue Bull Run
Although China’s insurance firms have a relatively short history in global real estate markets, Anbang and it competitors are rapidly showing themselves to be a force in London, New York and other global gateway cities.
In addition to buying the Waldorf Astoria, Anbang spent $415 million this May to buy the 26-storey Merrill Lynch Financial Center on New York’s Fifth Avenue. During the last year the company run by Wu Xiaohui, the husband of a grand-daughter of former Chinese leader Deng Xiaoping, has also acquired Belgian insurer Fidea NV and South Korea’s Tongyang Life Insurance Co.
Although Chinese insurance firms only began making a mark on global real estate markets in 2013 when Ping An Insurance bought the Lloyd’s of London building in the UK capital for £260 million ($403 million), Anbang and its competitors have quickly been making up for lost time.
According to figures collected by Mingtiandi, China’s insurance firms have invested more than $5 billion on global real estate in the last two years, with the pace of new deals gradually accelerating since the government began loosening the reins on outbound investment by these institutions in late 2012.
London and New York have been favorite targets for the insurance companies so far, with China Life, Ping An and Taikang Insurance all having acquired properties in the UK capital. In New York, Sunshine Insurance spent $230 million on a new hotel this year, and Taiping Asset Management, a subsidiary of Taiping Insurance, acquired a stake in a luxury residential project in Manhattan earlier this month for $$229 million.
The insurance companies have not limited their focus to New York and London, however, with Ping An and China Life announcing a $500 million project Boston project with developer Tishman Speyer earlier this year and Sunshine having purchased Sydney’s Sheraton on the Park hotel last year for $407 million.