Chinese Insurers Bid $1.3B for European Real Estate as Deal Wave Continues

Following close on the heels of Bank of China’s agreement last week to buy a New York tower for $600 million, two more major Chinese institutions are said to be bidding for overseas real estate assets, with the total value of the offers exceeding $1.3 billion.

China’s Ping An Insurance, which last year bought an office tower in London, is now said to be pursuing an office and hotel complex near the Frankfurt airport in Germany, while competitor Taikang Life has reportedly made an offer for a 19,000 square metre tower in the City of London.

The wave of offers for overseas real estate comes as China’s own property market slows down and investment firms are coming under pressure to go abroad in search of yield.

Ping An Chasing Billion Dollar German Building

According to a report in Bloomberg, Ping An Insurance has submitted a bid for The Squaire, which at 140,000 square metres (1,506,900 square feet) is Germany’s largest office building.

Sources familiar with the deal expect the mixed-use complex will fetch as much as $1 billion.

In July last year Ping An became the first Chinese insurer to invest in overseas real estate, following changes in government policy that make such deals possible, when it bought the Lloyd’s of London building for GBP 260 million ($408 million).

Since that time several other Chinese insurers have joined the overseas monetary migration, with Anbang Insurance buying the Waldorf Astoria hotel in New York for $1.95 billion during October this year.

Taikang Life Teams with Gaw Capital in Offer for London Tower

While Ping An seems to have moved on to Germany, its competitor Taikang Life is now looking for its first deal in London.

The Beijing-based based insurer has reportedly joined with Hong Kong-based private equity firm Gaw Capital Partners to submit a GBP 200 million ($313 million) joint bid for the Milton Gate in London’s financial district.

The nine-storey building on Chiswell Street was previously acquired by current owners Evans Randall in June 2009 for GBP127 million. According to a story in London’s Property Week, given a monthly rental of GBP 53.5 per sq ft, the annual rate of return for the building would be 5 percent if Taikang and Gaw succeed in purchasing it for GBP 200 million.

The bid by the two companies is said to well exceed that of their competitors and both Taikang and Gaw are currently said to be conducting due diligence on the transaction.

Gaw currently manages a private equity fund focused on London real estate and led the GBP 191 million (US$300 million) September acquisition of the city’s Exchange Tower from Blackrock.