Blackstone Buying Chinese Office Builder

Blackstone Buying Chinese Office Builder For US$3.05bil

CHINA – American investment giant Blackstone has confirmed that it’s close to concluding a deal to take over Hong Kong-listed office builder Soho China, reported Bloomberg on Wednesday afternoon (16 June, SGT).

Blackstone revealed that it is offering a total of up to HK$23.7 billion (US$3.05 billion) to acquire most of Soho China’s shares, making it the private equity firm’s largest property investment in China as the developer owns commercial properties in Beijing and Shanghai.

In particular, the American investment giant is offering HK$5 in cash per Soho China share. The price translates to a 31.6 percent premium over the office builder’s last closing share price before trading was suspended on Tuesday. Goldman Sachs is advising Blackstone on the transaction.

Soho China’s Chairman Pan Shiyi & its CEO Zhang Xin, who hold a majority interest in the office developer, have committed to dispose most of their stocks to Blackstone. However, they intend to retain a 9 percent stake, and Blackstone plans to keep the office builder listed on Hong Kong’s bourse (HKEX).

The Beijing-based office developer has been viewed as a takeover target since early-2020, as falling office rents across key Chinese cities and a dearth of new properties in the firm’s pipeline have negatively impacted its earnings.

Established in 1995, the company presently owns and operates 1.3 million sq ft of commercial properties across China. Its assets include the humongous Bund SOHO in Shanghai and the iconic Wangjing SOHO in Beijing that was designed by the late architect and Pritzker-awardee, Zaha Hadid.

As for the buyer, Blackstone has been investing in office, logistics, & retail properties in China since 2008. Currently, the private equity firm owns about 6 million sq ft of properties in the country, and is ramping up its investments there. In fact, it plans to raise a minimum of US$5 billion for a fund focusing on the region.

As of 31 March 2021, Blackstone’s property division has around US$196 billion of capital under management. As for the 2 key funds acquiring Soho China’s stake – Blackstone Real Estate Partners Asia II & Blackstone Real Estate Partners (Offshore) IX – they are managing US$7 billion and US$20 billion in capital, respectively

In November 2020, Blackstone closed a US$1.1 billion transaction to take control of the largest urban logistics park in southern China’s Greater Bay Area. In late-2018, the American investment giant purchased a mall and office development in Shanghai from Mapletree Investments for US$1.2 billion.

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