Greenland, Ping An Lead Four Chinese Investors in Acquisition of $1B Bay Area Project

Shanghai-listed Greenland Group is leading a group of four Chinese investors, including a unit of insurance giant Ping An, in acquiring a 42-acre waterfront site in South San Francisco, California to build a $1 billion life sciences complex.

Already one of China’s most prolific outbound real estate investors, Shanghai-based Greenland’s US subsidiary has joined with equity partners Ping An Trust, Agile Group Holdings (formerly Agile Property) and Poly Sino Capital Limited to invest in The Landing at Oyster Point, a 42-acre waterfront site roughly 10 miles (16 kilometres) south of downtown San Francisco, according to an announcement by Greenland late last week.

Chinese Developers Hope to Build a Life Sciences Campus

The Chinese joint venture acquired their foothold on the California coast from local developers Shorenstein Properties and SKS Partners for a reported $171 million. The property is said to be the largest remaining contiguous development site in South San Francisco and is already approved for development of 12 separate R&D/office buildings spanning some 2.25 million square feet (209,000 square meters), with construction slated to begin by mid-2018.

The project aims to serve as a campus for biotechnology companies, in an area that has become one of the world’s leading biotech hubs.

Shorenstein Properties and SKS Partners, originally bought the site in 2008 for $84 million and have since partnered with the city of South San Francisco to invest in infrastructure including a $26 million passenger ferry terminal which started operations in 2013.

Kidder Mathews, which advised Greenland Group and Ping An on the transaction, sees a hot market for biotech property in the Bay Area, with available facilities struggling to meet the sustained growth in demand. The real estate firm reported that life science premises in San Mateo County, where Oyster Bay is located, had an overall vacancy rate of 1.37 percent in the second quarter, dropping 48 percent over the previous quarter due to “unrelenting leasing activity” from occupiers such as Merck and Calico Life Sciences.

Greenland, Ping An expand their US portfolios

For Agile, which has been best-known in recent years for the financial and legal struggles of its chairman Chen Zhuolin, the bay area venture is the company’s first investment in the US, while Greenland and Ping An have already made a string of US property investments. The announcement of the bay area deal came the same day that Ping An indicated that it could boost its overseas property holdings by up to $22.5 billion within five years.

Greenland, which last year was China’s second-largest developer by sales, already has some 5.57 million square metres of development projects overseas, with a cumulative investment of RMB 124 billion ($18.6 billion). The company was among the first big mainland investors in California when it bought the $1 billion Metropolis mixed-use project in downtown Los Angeles in 2013. After that initial US foray, the state-run colossus has gone on to partner with New York developer Forest City Ratner to develop Brooklyn’s $4 billion Pacific Park project (formerly known as Atlantic Yards).

This year, Greenland took a 41 percent stake in a residential conversion project for Manhattan’s Park Lane Hotel.

Ping An insurance is another rising player in the outbound investment scene, with projects in Australia, Japan and the US. The Shenzhen-based firm, one of China’s largest insurers, in 2015 alone invested $1 billion in a warehouse portfolio and $167 million in a Boston mixed-use project with Tishman Speyer and China Life Insurance.

Ping An was the first Chinese developer said to be interested in the Oyster Point site, with Mingtiandi reporting in March this year that the Chinese financial services firm was in talks with Shorenstein and SKS to take an unspecified stake in the project.