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CapitaLand forms JV to buy Shanghai building as seed asset for new fund
CapitaLand has formed an equal joint venture to buy prime office space in Shanghai as a seed asset for a value-add fund it is setting up to invest in commercial real estate in key cities in Asia.
The venture with an unrelated third party will acquire 70 per cent of Pufa Tower for 2.75 billion yuan (S$546.3 million), according to a statement from the company Monday (7 January). The acquisition marks the group’s first office property in Shanghai’s Lujiazui central business district in the Pudong New Area.
Pufa Tower is 34-storey building with three basement car park levels. Post transaction, CapitaLand and its joint venture partner will own levels 8 to 19 and levels 21 to 32 with a total gross floor area (GFA) of 41,773 square metres, as well as 61 car park lots with property title.
The Lujiazui CBD commands the highest office rents in the city, and rent is expected to continue to rise over the next few years in view of a sharp decline in Pudong’s office supply from 2019.
“The acquisition of Pufa Tower, an operational asset, will immediately contribute to the group’s recurring income,” Lucas Loh, CapitaLand’s president for China and investment management, said. “Continual high demand for quality commercial properties in China’s top tier cities, coupled with low supply, have made the renewal of ageing commercial assets a compelling investment strategy in these markets. Pufa Tower is a prime asset to be seeded into the commercial value-add fund we are raising.”
Including this latest acquisition, CapitaLand now owns or manages 21 commercial properties in
Shanghai that span close to 1.9 million sq m in GFA. Shanghai is part of the five core city
clusters under CapitaLand’s China strategy.
