China Investment Corporation (CIC) recorded a loss on overseas investment in 2015, the sovereign wealth fund’s first negative net annual return since 2011. The fund entrusted with investing China’s foreign reserves now has $813 billion in total assets including a growing number of global real estate holdings.
As part of CIC’s annual report, chairman and CEO Ding Xuedong released a statement acknowledging the struggles of both the global economy and CIC. He added that CIC coped with these challenges by exploring new business opportunities, which included placing a greater emphasis on real estate.
The fund is already China’s largest cross-border real estate investor, and nine property investments last year, including billion dollar deals in Europe and Australia, after raising its target allocation to the sector.
CIC Picked Up French Malls and Aussie Offices in 2015
In July of last year, CIC purchased Morgan Stanley-controlled Investa Property Group’s office assets for $1.79 billion. The transaction, which was named as Deal of the Year for Asia by PERE magazine, saw CIC become one of Australia’s biggest commercial landlords.
In addition to its Aussie mega-acquisition, CIC also made its largest retail buy in 2015, when it partnered with AEW Europe to acquire a portfolio of ten shopping centers in France and Belgium. The $1.35 billion acquisition from CBRE Global Investors was the first European acquisition for CIC since purchasing a London office park in 2013.
Data compiled by Mingtiandi revealed that CIC has invested more than $5.52 billion in property developments since 2013.
2015 was a Tough Year for Sovereign Wealth
Despite annualized return on overseas investments falling to 4.58 percent in 2015, experts point out that CIC’s performance was not a disaster. Johnny Fang, a Shanghai-based analyst at Z-Ben Advisors Ltd., told Bloomberg that considering the high volatility in financial markets last year, CIC performed well especially when compared to other sovereign wealth funds.
Ding noted that 2016 is likely to see sluggish growth, subdued inflation, low productivity and lackluster trade. In light of this, CIC will continue to look for prudent international real estate opportunities to help improve returns. The fund purchased three business parks in Southeast England for $355.4 million at the beginning of the year.