China has picked up another piece of Manhattan after Taiping Asset Management, an offshore subsidiary of one of the country’s biggest insurance firms, paid $229 million for an undisclosed equity stake in a 58-storey condo development project in New York’s Tribeca area.
Taiping bought into the 111 Murray Street project, which is being developed by a trio of New York developers, as the latest investors in a project that has already secured $674 million in capital, and is projected to cost $820 million, according to a report in New York real estate website The Real Deal.
The transaction is the first major overseas real estate investment by Taiping Asset Management, and comes as China’s major insurers continue to buy up major real estate assets in top markets such as New York and London.
Taiping Jumps into the New York Market
Taiping’s new partners in the New York deal are local developers Witkoff, Fisher Brothers and Howard Lorber who purchased the site in 2013 for $200 million. New York developer Steven Witkoff was reportedly advised on the investment transaction by Eastdil Secured and the Carlton Group.
The 241-metre-tall tower is expected to yield 157 condos when it is completed in 2018, a prospect that may be welcomed by Taiping Insurance’s wealth management clients back on the mainland. The Kohn Pedersen Fox-designed project is located just two blocks from the landmark One World Trade Center in Manhattan.
Chinese Insurers Just Getting Started
The investment by Taiping Asset Management, while a first for the Hong Kong-listed company, is just the latest in a series of deals for the mainland’s insurers and other institutional investors, who have been encouraged to invest abroad by a series of changes in Chinese regulations.
The best known of these Chinese outbound deals is Anbang Insurance’s $1.95 billion 2014 acquisition of the Waldorf Astoria hotel, but other purchases in the US have followed. Just a few months after Anbang’s deal became public, the Bank of China acquired its own New York asset by picking up the as yet unfinished 7 Bryant Park office tower for $600 million.
In February this year Beijing-based Sunshine Insurance paid $230 million to acquire the then still-unopened Baccarat hotel in New York, and that deal was followed just two months later by a decision by Ping An Insurance and China Life to buy into a $500 million Tishman Speyer development in Boston.
The trend by Chinese insurers to invest in overseas real estate assets is driven both by declining returns from China’s domestic real estate market, and by a series of regulatory reforms that make it easier for Chinese companies to move their cash out of the country.