Ping An Commits $1B to US Logistics Real Estate

Ping An Insurance Group, one of China’s five largest insurers, this week became the first major Chinese cross-border investor in the logistics real estate market by committing as much as $1 billion to a joint venture warehouse investment platform in the US.

Ping An, which already has invested in commercial properties in the UK and the US, announced 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.

Ping An’s investment in US warehouses comes after the Chinese insurer acquired a pair of office buildings in London, and invested in a mixed-use development project in Boston as it leads a growing wave of cross-border deals by mainland insurers.

Up to $1 Billion for US Warehouses

Together with its new US property fund management partner, Ping An initially has committed to investing in a logistics portfolio worth more than $600 million, according to a statement released by Ping An.

The deal was executed through Ping An’s trust division which invests in higher-yielding alternative assets on behalf of the firm’s corporate and high net worth individuals in China. In addition to its insurance business, Ping An also operates banking, securities and trust businesses in China.

“We see a tremendous opportunity in the US market, and this partnership underscores our continuing efforts to partner with world-leading companies as we seek new overseas real estate opportunities,” Li Qingxian, Executive General Manager of Ping An Trust’s Overseas Investment Division said in a statement. He added that, “Ping An is continuing to look for investment opportunities on behalf of our institutional and high net worth clients.”

With this initial tranche of assets already occupied by leading companies, the Shenzhen-based company says it also has identified another $400 million in properties for future acquisition, which would bring its total investment in the platform up to $1 billion.

Ping An Already One of China’s Leading Outbound Investors

The commitment to US warehouse assets comes after Ping An has already invested in commercial properties in the US and the UK.

The insurer became one of China’s first institutional investors to head overseas in July 2013, when it purchased the Lloyd’s of London building in the UK for ₤260 million ($390 million at the time).

This year, Ping An has followed up by acquiring a second London office asset for ₤327 million ($490 million) and teaming up with competitor China Life to take a majority stake in a $500 million Tishman Speyer development project in Boston.

Earlier this year, a Ping An spokesman told Mingtiandi that the insurer, which has RMB 1.4 trillion ($220 billion) in current assets under management, would be looking into logistics opportunities overseas, as it seeks to expand its portfolio into global real estate.

Since late 2012, China’s insurers have been allowed to invest up to 15 percent of their assets overseas, and Ping An estimates that the industry has only invested two to three percent of these assets across the border so far.