Sigma Delta Partners Investment (“SDP Investment”) has formed a joint-venture with an international institutional investor and completed the acquisition of the U-Show Plaza mixed-use project in Beijing.
The purchase ranks as one of the largest real estate transactions in Beijing since the start of the COVID-19 outbreak and with the partners planning to invest a total of $530 million into the project, symbolises global investors’ strong appetites for China’s commercial properties.
The U-Show Plaza deal is the second acquisition completed by SDP Investment, a three-year-old property firm led by former Warburg Pincus Managing Director, CHI Miao, after its $1.33 billion purchase of Beijing Dinghao Plaza in 2019.
Betting on Accessibility
U-Show Plaza is a 12-storey office and retail project with a total GFA of 132,000 square metres. Situated just off the South 2nd Ring Road, directly opposite the Beijing South Railway Station which connects travelers to subway lines 4 and 14, the property is conveniently integrated into the surrounding transportation infrastructure with easy highway, subway, high-speed railway and airport connections.
Leveraging the strength of both parties’ investment track records in China and local experience, the joint venture plans to fully renovate and reposition the property from a mixed-use building into an international Grade A office complex.
Located in Bejing’s Fengtai District, the project targets tenants seeking affordable office alternatives as the Beijing Municipal Plan and Fengtai District Plan for 2017 to 2035 aims to transform the district into an emerging business zone focusing on technological innovation and financial services.
Investment Veteran Sees De-centralisation Trend
“We will upgrade U-Show Plaza into a regional landmark building to maximize the project’s potential, CHI Miao, CEO of SDP Investment, said. “The new landmark will attract quality tenants from the high-tech, finance and professional service sectors, and will help Fengtai District to evolve into an advanced business district in Beijing.”
Chi, who previously served as Head of Asia Real Estate at Warburg Pincus has successfully led more than 30 private equity and real estate investments representing a total equity of over $3 billion and achieving an overall IRR of 25 percent.
Chi linked the project’s potential to a broader trend of company’s moving beyond the capital’s most crowded districts as infrastructure improves across the city.
“Benefiting from Beijing’s improving transportation infrastructure and business-friendly environment, high-quality office spaces in decentralized locations have become increasingly attractive to large tenants requiring bigger office spaces and reasonable rents, Chi explained.
“The South Railway Station area, where U-Show Plaza located, is very similar to the well-developed Shanghai Hongqiao Business District, but currently suffers from a shortage of premium offices which can meet growing market demand,” he said. Upon completion, SDP expects the renovated and rebranded office complex will help promote the profile of the neighborhood and stimulate business in the district.
Winning Amid the Pandemic
Chi set up SDP Investment in 2017 with a focus on acquiring, renovating and operating prime properties in Tier 1 cities in China. The Beijing project fits with the company’s specialisation in identifying under-valued investment opportunities for acquisitions, and then providing tailor-made asset management solutions to maximize property values.
“We are grateful for our partner’s support and trust as we secured this transaction during the economic uncertainties caused by the Covid-19 outbreak, and we are proud to add the property to portfolio following our purchase of Dinghao Plaza last year,” Chi said
With the addition of U-Show Plaza to its portfolio, SDP Investment now manages over 300,000 square metres of prime offices in Beijing, and joins the ranks of the capital’s leading institutional office owners.
The office investment adds to Chi’s track record investing in commercial, logistic, rental apartment, hospitality, industrial parks and other asset classes. In his career, Chi has invested in projects including R&F Group, Sunshine 100, Red Star Macalline, 7 Days, ESR, Mofang Apartment, and Eggshell Apartment, among others.
“Despite the pandemic, we still have strong confidence in China’s real estate market given China’s resilient economic structure,” Chi added. “This transaction is in line with our strategy of focusing on acquiring undervalued assets and bringing in our expertise of proactive asset management.” The investment veteran went on to express his faith in the opportunities that China continues to present for global investors interested in diversifying portfolio risk and capturing growth potential.
This sponsored feature is provided by Sigma Delta Partners Investment. To find out more about the company and its projects, visit sdp-inv.com.