China: PGIM Real Estate sells Shanghai office property to BlackRock

PGIM Real Estate has sold Waterfront Place, an office property in Shanghai, on behalf of Asia Property Fund (ASPF) III. The purchaser was NYSE-listed BlackRock Inc.

JLL advised PGIM Real Estate on the deal. In an account by Mingtiandi that cited sources, the sale consideration for the disposal of Waterfront Place Blocks E and G amounted to RMB 1.2 billion ($184 million).

PGIM Real Estate is the real estate investment business of PGIM, the $1 trillion global investment management businesses of NYSE-listed Prudential Financial Inc. It has gross assets under management of $69 billion ($50.5 billion net) as of 30 September 2017.

Waterfront Place comprises two grade-A office properties with a total area of 27,805 square meters of office space as well as underground parking in an established mixed-use development in Chang Feng, one of Shanghai’s more mature decentralized business districts.

“We achieved an attractive entry price when we acquired Waterfront Place by capitalizing on market dislocation. In addition, an active asset management strategy, alongside increased demand from investors for income-yielding assets, enabled us to maximize the value of this investment on behalf of our investors, well ahead of our original investment plan,” commented Benett Theseira, head of Asia Pacific for PGIM Real Estate, in a media release.

PGIM Real Estate acquired the two blocks along Daduhe Road from ARA Asset Management in January 2016 for a consideration of RMB 830 million ($127 million) via PGIM’s ASPF III. The property fund held a final close at $647.9 million in May 2016.

The property is of a 2009 vintage and is the second mainland China asset sale in just over a month for PGIM Real Estate. The purchase follows BlackRock’s purchase of the Shanghai Central Park office tower in the same district, which it reportedly acquired for RMB 1.37 billion ($199 million) from Hong Kong Shanghai Alliance Holdings Ltd.

BlackRock recently registered as a private fund management company in China with the Asset Management Association of China at the end of 2017, in a move that will permit its Shanghai arm to sell investment products in the country to eligible institutional and high net worth investors.

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