Gingko Tree Investment, a unit of China’s foreign exchange administrator, was revealed this week as the silent partner in the acquisition of a 70,000 square metre (753,000 sqft) office complex in Brussels, Belgium late last month.
According to reports in the European media, Gingko Tree, which serves as the investment arm of China’s State Administration of Foreign Exchange (SAFE), was the heretofore unrevealed financial partner of German fund manager Hannover Leasing, which led the estimated €270 million ($319 million) acquisition of the 26-storey Covent Garden complex.
The acquisition is the latest in a string of European real estate purchases by Chinese government investment funds, and was the second largest investment in Belgium last year.
UK Investment Bank Sells Office Asset After Leasing Out
Covent Garden was sold to Gingko Tree and Hannover Leasing by Evans Randall, a privately-held UK investment banking and private equity group which originally acquired the then-partially completed project in 2007. Exact details of the purchase price or the ratio of shareholding between the acquiring partners were not made public at this time.
More than 50,000 square metres of the complex, which spans a 26-storey tower and 10-storey sub-tower at Place Charles Rogier in Brussels’ central Saint-Josse-ten-Noode district, is leased out to the European Commission.
Kent Gardner, CEO of Evans Randall said: “The positive pricing secured represents not only the quality of the asset, but our ability to navigate a challenging market. The low interest rate environment in Europe highlights the value of an extremely secure, long-term income stream, which we achieved with the European Commission occupation.
According to Evans Randall, which was advised on the sale by JLL and Clifford Chance, the property was 100 percent leased at the time of sale. Gingko Tree and Hannover Leasing were advised by DTZ, Loyens & Loeff and Linklaters on the acquisition.
Gingko Tree Continues to Favor European Real Estate
The Brussels deal follows just over five months after Gingko Tree entered into a joint venture with the UK’s Crown Estate to acquire a shopping mall in England for £345.5 million ($522.5 million). In October, the unit of SAFE, which is responsible for managing China’s foreign currency reserves, also was said to be interested in buying Siemens’ offices in Munich for a reported $630 million.
During 2012 and 2013, the secretive Chinese government investor is said to have acquired more than $1.6 billion in UK property assets and infrastructure, including student housing and office buildings. This shift to European real estate is seen by many as a way for China to reduce its reliance on US Treasury bonds as an investment vehicle, and to seek greater returns on the country’s massive foreign reserves.
Much of Gingko Tree’s strategy is mirrored by its higher profile counterpart, China Investment Corporation (CIC), which as the country’s sovereign wealth fund has looked to UK real estate assets as source of enhance investment returns.
In November 2013, CIC bought a London office project from Blackstone for £800 million ($1.2 billion), and in 2012 acquired the London headquarters of investment bank Deutsche Bank for approximately £245 million ($370 million) and also took up a stake in London’s Heathrow airport.