Transactions - JUNE 28, 2017

AEW acquires office in Shanghai for $226m

by Andrea Waitrovich

AEW has acquired an office building in Shanghai for $226 million.

The property is the 11th and final investment that has been acquired on behalf of AEW Value Investors Asia II, the second in AEW’s series of value-added funds focused on property investment in key gateway cities across the Asia Pacific region.

Innov Tower, located in Caohejing, is a 23-story en-bloc class A office building totaling approximately 435,000 square feet.

AEW’s value-added strategy is to acquire well-located commercial assets that could benefit from active asset management strategies including repositioning, releasing and renovation.

AEW Value Investors Asia II closed in 2016 with $640 million raised, exceeding its $500 million target. The fund is almost fully invested.

And AEW Value Investors Asia III is currently fundraising with a $750 million target.

Shanghai’s GDP grew by 6.8 percent year-over-year in 2016 with tertiary industry growing by 9.5 percent year-over-year. Driven by solid fundamentals, Shanghai’s office property market was active during the first quarter 2017, with several completions, an active leasing market, and various en bloc sales transactions, according to Colliers International.

The firm expects a new supply peak over the rest of 2017. Leasing demand is robust but is outweighed by new supply and the vacancy rate in the CBD is forecast to be at 15 percent over the next two years.

During the first quarter 2017, nine transactions were completed totaling $2.33 billion in sales volume. The activity was supported by domestic and foreign investors, and domestic end-users.

Transctions include: domestic investor Jiaxing Shengshi Shenzhou Wenli Investment Partnership’s acquisition of a 50 percent stake in Bund Finance Center in Huangpu from Fosun for $780 million; Kland’s purchase of Garden Square in Jing’an from Blackstone for $580 million; BlackRock’s purchase of Central Park in Putuo from Hong Kong Shanghai Alliance for $200 million; Ascendas-Singbridge’s purchase of Baolong Tower in Huangpu from AEW for $190 million; Jinagsu Yancheng Investment Group’s purchase of Poly Greenland Plaza B1 in Yangpu from Poly-cum-Greenland for $170 million; and Foresea Life Insurance’s purchase of Hongqiao Green Valley Plaza Bloc E in Minhang from Shanghai United Properties Investment for $135.3 million.


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