On January 22nd, news of a discounted sale of the entire office building stirred up the Shanghai office market, with the target of sale being global asset management giant BlackRock.
On that day, there were rumors in the market that BlackRock was selling Shanghai office buildings at a discount of 30% below cost, and even marked the geographical location of the sale target as one of two connected commercial buildings in Changfeng on the north bank of Putuo District, Shanghai. In 2018, BlackRock bought two buildings for 1.2 billion yuan, and if one of them was sold, the selling price would be around 420 million yuan.
"We will not comment on individual investment projects. The matters reported by the media recently have nothing to do with BlackRock Fund and BlackRock Jianxin Wealth Management, and have no impact on their operations. We will continue to be committed to our long-term development strategy in China to meet the investment needs of domestic investors and help them achieve financial goals." After this news spread, a BlackRock spokesperson quickly clarified this on January 23, However, it also confirms the authenticity of the sales news.
The reporter from Huaxia Times learned from relevant channels that the Shanghai office building project to be sold is a private equity investment fund managed by BlackRock's overseas real estate investment team, and has no connection to BlackRock's domestic business.
Conduct on-site visits to the sold targets
Located between Loushanguan Road on Shanghai Metro Line 2 and Changfeng Park on Line 15, there are approximately 20 commercial office buildings standing on the outskirts centered around Changfeng Joy City Mall. On the morning of January 24th, a reporter from Huaxia Times searched for relevant office buildings based on some videos showing BlackRock's unsold target located in the "North Bank Changfeng" area and the appearance of the building.
"This belongs to the office buildings of Changfeng on the north bank, and the office building you are looking for is in front," a security guard in the area told reporters.
Subsequently, the reporter discovered that there were two connected commercial buildings in the area: one was a high-rise commercial building marked as Building AB of Hailiang Building; The other one is two cylindrical commercial buildings with signs indicating Shanghai Changfeng Cross Mining Investment Co., Ltd. on the outside.
"We are security guards hired by the property management company, and we are not sure who owns this building or which one is for sale," a staff member told reporters in the lobby of the next building, while also stating that it is not convenient to disclose the property information of the building and the current occupancy rate.
On January 24th, a senior executive of a leading rental agency group in Shanghai revealed in an interview with our reporter that BlackRock is selling office buildings E and G in the Changfeng Ecological Business District of Putuo District, with a total construction area of 27800 square meters.
This location has a superior geographical location, with a large comprehensive commercial center Changchangfeng Dayue City on the north side, a five-star newly developed Asia Pacific JW Marriott Hotel and Changfeng Park on the east side, and Suzhou River on the south side. In 2018, BlackRock bought from Baode Xin Real Estate Company for 1.2 billion yuan to sell office buildings, which is actually an offshore private equity fund managed by BlackRock Asia Pacific Real Estate Investment Team. They are searching for potential buyers through various channels, and this news leaked out Perhaps it is also an institution in the Shanghai rental and sales market that explores the reactions of buyers by releasing information. In fact, there are many commercial and office buildings in this area, and competition is also fierce under the current market situation, especially with the decline in rental returns. The price war between commercial buildings in different districts has not stopped The senior management of the intermediary admitted in an interview.
In fact, in the eyes of industry insiders, buying and selling entire buildings in the Shanghai office market is common, but the seller is also an alternative asset institution under BlackRock, which has attracted market attention. This sale is only an isolated case and the underlying amount is not large.
The reporter found that BlackRock Group fully owns BlackRock Fund domestically and is the controlling shareholder of the Sino foreign joint venture wealth management company, BlackRock Jianxin Wealth Management. In addition, it also fully owns BlackRock Overseas Investment Fund Management (Shanghai) Co., Ltd., which conducts qualified domestic limited partnership (QDLP) business from domestic fundraising to overseas. As of now, BlackRock Fund, BlackRock Jianxin Wealth Management, and BlackRock Overseas Investment Fund Management (Shanghai) Co., Ltd. are not involved in investment in domestic office building projects. However, alternative investments are indeed a part of BlackRock Group's overseas business. According to the relevant financial report, as of the end of 2023, BlackRock Group's managed alternative assets amounted to $275.984 billion.
Global giants continue to intensify their efforts
"As an alternative investment area for various global asset management giants, it is normal for commercial real estate to have both inflows and outflows. Moreover, BlackRock's private equity funds only sell targets worth hundreds of millions of yuan, which is not likely to cause much turbulence compared to other institutions' continued investment in various types of real estate in China." said Hong Tao (Xiao Biao), a senior figure in the Shanghai real estate industry.
It is worth noting that in October 2023, Bain Capital, also a well-known asset management giant, announced the establishment of a joint venture with China's leading new economic infrastructure platform, Dongjiu Xinyi, to seek investment opportunities in Chinese manufacturing park assets. Relevant information shows that the total capital size of the joint venture is about 250 million US dollars, and the first planned investment assets are in the Yangtze River Delta region.
Going back further, in August last year, Brookfield, one of the world's largest alternative asset management companies, also announced the completion of its acquisition of a rental residential project in Jing'an District, Shanghai. This is the expansion of Brookfield Asset Management's presence in the rental residential sector in China, following the Shanghai Wujiaochang Bolin Hotel and Executive Apartments.
It is understood that the above ground construction area of the project is about 18000 square meters. At that time, Bofeng Asset Management stated that it would provide approximately 280 high-quality rental housing units, which are expected to enter the market in 2024 and are positioned in the mid to high end market. And this is not Bofeng Asset Management's first long-term apartment project in China. As early as September 2022, Bofeng Asset Management's Shanghai Wujiaochang Bolin Hotel and Executive Apartment, with 210 rooms, had already opened.
As an important international metropolis, Shanghai continues to attract migrant populations and younger generations of workers. With the continuous growth of migrant populations and increasing rental demand, rental housing will still be in short supply. It is believed that under the favorable policy environment and capital market promotion, Shanghai and even China's long-term rental apartment market will usher in a new period of rapid development, and will continue to seek new investment opportunities and expand in China The territory of the rental housing sector Bofeng Asset Management stated.
As a giant in the insurance industry, AIA Life Insurance has been continuously increasing its holdings in the Chinese market since 2022, with a total investment amount exceeding 20 billion yuan. In February 2023, AIA Life Insurance invested in the DNE (DJ NEW EAST HOLDING LIMITED) Jinchuang Project Fund, which is a property portfolio of four buildings in Shanghai Jinchuang Building with a total investment amount of over 3.2 billion yuan. The total construction area of the Jinchuang Building property portfolio is about 119800 square meters, of which the above ground area is about 88600 square meters. The land is used for research and development, and the remaining term of the land is 33 years. The term of use is until December 30, 2056, and the project is basically a biopharmaceutical enterprise. In December 2022, AIA Life Insurance announced that it would invest 5.03 billion yuan to acquire a controlling stake in Shanghai Shisen Real Estate Co., Ltd. to acquire a commercial, office, and cultural comprehensive real estate project in 89 neighborhoods on the North Bund of Shanghai, with a total investment of approximately 5.181 billion yuan. AIA Life Insurance will continue to provide funding for the construction and subsequent operation of this project, with a total investment of approximately 8.7 billion yuan, mainly from insurance liability reserves. The project was completed and opened in the first half of 2023.
During the same period, Singapore's Cadre Group established the China Special Opportunities Partnership (CCOP), with a total committed capital of SGD 1.1 billion, to invest in special opportunities projects in China, including traditional properties such as office buildings and shopping centers, as well as emerging properties such as logistics and industrial properties.
We currently do not make predictions about potential buyers of this target, but from the perspective of foreign investment, we have also contacted many foreign institutions to help facilitate transactions. Overall, foreign companies in mainland China often adhere to investment strategies that value long-term and stable returns when acquiring real estate and choose acquisition targets for M&A. Traditional operating properties such as commercial real estate and office buildings have characteristics of long-term and stable returns, and core cities are particularly Real estate in first tier cities can ensure the stability of investment returns for foreign-funded enterprises Senior analysis of the aforementioned intermediary group.
The senior executive told our reporter that as China further expands its opening-up to the outside world, foreign-funded enterprises are optimistic about the strong fundamentals of the Chinese economy and will continue to expand their investment in China. Previously, foreign and Hong Kong funded enterprises such as Kai De, Taikoo, New World, Hang Lung, Goldman Sachs, etc. have clearly stated that China is an important market for investment. These foreign-funded enterprises often have been rooted in the mainland for many years, have a certain understanding of the mainland market, and have rich development and operation capabilities in traditional operational property fields such as commerce and office.