Blackstone exits first property in China

The private equity firm stands to make a healthy return on its investment, having bought Channel 1 from VXL Capital for approximately RMB1 billion in November 2008 on a turn-key basis. The 42,000-square-meter mall opened in September 2009, and Blackstone helped to increase occupancy at complex to more than 90%, the firm claims.

VXL, a Hong Kong-based property investor and financial services company, retains a 5% stake in the property.

Blackstone has been an aggressive real estate player in Asia Pacific of late, but its activities in China have been slower to take off. Its subsidiary Insite Asset Management Group has been its key dealmaker in the market, and not only managed Channel 1 but oversees five other properties: Yu Garden Fashion, Yueda 889 Plaza, Amanda Plaza, The Skychop Plaza and Yi Feng Galleria. Local conglomerate Shanghai Pengxin Group is rumored to be taking a 30% stake in Insite, to help accelerate the group's activities in China's commercial property market.

Last year, Blackstone also agreed to support a housing development project in Dalian launched by Great Eagle, the Hong Kong real estate development group.

The crux of Blackstone's regional real estate activity in 2011 has centered on Australia. It purchased Australian shopping mall operator Centro Properties Group's US assets for $9.4 billion in February - supposedly its largest deal since the onset of the global financial crisis - and acquired Valad Property Group for $883 million in August.

Region-wide, it assumed control of the $2.65 billion Bank of America Merrill Lynch Asian Real Estate Opportunities Fund, which targets investments in China, Japan, South Korea and India. That vehicle closed in late 2008, with $2.65 billion from Asian, North American, European and Middle Eastern LPs.

A year ago, Blackstone was also said to be finalizing a deal for Morgan Stanley's holdings of its Japanese real estate assets, valued at JPY100 billion ($1.14 billion). In February, the company teamed with CIC to purchase that portfolio, marking its first-ever investment in Japan.

Blackstone saw worldwide real estate revenues of $648.5 million for the second quarter of 2011, up from $208.5 million for the second quarter of 2010. Real Estate had six-month revenues of $1.2 billion, compared with revenues of $360.7 million in the same period of 2010. Fee-earning assets under management were $27.9 billion, compared to $23.8 billion for the second quarter of 2010. This increase was largely attributed to the addition of assets from Bank of America Merrill Lynch and Centro.

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• Topics
• Exits
• Greater China
• Real estate
• China
• The Blackstone Group
• Real estate
• Exit