Is Ping An Ready to Make Its First Real Estate Buy in the Bay Area?

China’s insurance giants continue to show off their hunger for US real estate with Ping An Insurance reportedly preparing a bid for a 209,000 square metre (2.25 million square foot) office complex in the San Francisco bay area.

Ping An, which is China’s second-largest insurer by market value, is said to be in talks with California-based developers Shorenstein Properties and SKS Partners to take an unspecified stake in the Landing at Oyster Point, a commercial project under development as part of a growing biotech hub in South San Francisco.

The news of Ping An’s investment comes after Anbang Insurance, a smaller and less established mainland institution, stunned the world by acquiring $6.5 billion in hotels on Friday, at the same time that it is leading a $13 billion bid to acquire Starwood Hotels & Resorts.

Ping An has also shown a taste for US property assets, having previously invested in a development project in Boston, as well as committing $1 billion to a US joint venture logistics real estate platform last year.

Ping An Working on Deal with San Francisco Developers

Ping An is currently negotiating a deal with SKS and Shorenstein to invest in the Landing at Oyster Point project, although no agreement has been finalised, according to a report in the San Francisco Business Times.

The local developers last year hired JLL to market the project to potential investors, with reports indicated that SKS and Sorenstein were planning to bring in $150 million to $200 million from potential backers. The amount that Ping An is offering for the project, and whether the insurer would buy the property outright or join forces with the US developers has not yet been confirmed.

SKS and Sorenstein originally bought the 42-acre site in 2008 for $84 million, and have since had it approved for development as a life sciences campus or office space.

Mainland Insurers Build Global Portfolios

Should Ping An finalise an agreement for the Landing at Oyster Point, it would confirm the Shenzhen-based company as among China’s most active cross-border real estate investors.

Although its deals seemed dwarfed by Anbang’s mega-acquisitions, Ping An became the first Chinese insurer to acquire real estate outside the mainland, when it it purchased the Lloyd’s of London building in the UK capital for ₤260 million in July 2013. The company, which reported total assets of $734 billion at the end of September 2015, bought a second building in London last year for ₤327 million (then $490 million).

While not having acquired trophies on the scale of Anbang’s $1.95 billion deal for the Waldorf Astoria, Ping An has already shown itself willing to move into early stage development projects, such as during April last year, when it invested $167 million into a Tishman Speyer project in Boston beside its mainland counterpart China Life.

Speaking about the growth of cross-border real estate acquisitions by Chinese insurers at a conference in Shanghai in June 2015, a Ping An representative said, “I anticipate this trend going up. At least for our (Ping An’s) part, right now we want to do more.”

In October last year Ping An announced that it was committing $1 billion to a joint venture with Denver-based Blumberg Investment Partners to acquire and develop distribution centres in major American markets including the New York area, the Mid-Atlantic region, the Pacific Northwest, southern Florida, Atlanta and Colorado.