Singapore sovereign wealth fund GIC and global real estate fund manager AEW have purchased a Beijing office building at a discounted price – less than RMB3bn (€370m), according to sources close to the transaction.
IPE Real Assets was told that the investors began negotiations for the property with a distressed domestic Chinese developer late last year.
“The opening asking price was higher than they ended up paying because of what has happened during this year,” said a source close to the negotiations. “The partners managed to get the vendor to drop the price by RMB30,000 per sqm.”
It is understood that the final transaction was 10% below the original asking price.
“Having GIC co-invest in the asset boosted confidence and provided credibility to the ability to underwrite the cheque,” said a person familiar with the deal, adding that GIC’s knowledge of the Beijing office market helped.
In February, GIC bought the LG twin-tower in Beijing for RMB8.8bn, and in November 2019 it took a 50% interest in the Beijing Capital Land tower for an undisclosed amount.
“AEW is very proud to have GIC as its joint venture partner in this transaction,” the source told IPE Real Assets, adding that the deal would boost confidence in the market.
It is understood that AEW is the majority shareholder in the joint venture and is holding the asset in the AEW Value Investors Asia IV fund, launched late last year.
The joint venture also includes a Chinese group, Sigma Delta Partners, which has an interest of “less than 10%”.
The 1.1m sqft building, near Beijing Financial Street, is vacant.
“The investors are happy that they can move in with their renovation plan straight away,” the source said.
“The beauty of this is that they don’t have to work on leasing the building for the next 18 months. And hopefully, by that time the project is completed, the COVID situation will have improved.”