Singapore's Keppel Corporation is ramping up its investments in China's commercial hub of Shanghai with the US$368 million (S$511 million) purchase of a 70 per cent stake in a major office and retail building.
The move is in line with a push by Keppel Land China - part of its property arm Keppel Land - to lift its presence in high-growth cities such as Shanghai.
The Soho Hongkou is a 29-storey office tower with a two-storey retail podium in the Hongkou shopping district. The building, completed in late 2015, is 200m from North Sichuan Road metro station.
A fund operated by Alpha Investment Partners, part of Keppel's asset management arm Keppel Capital, is investing US$210 million for a 40 per cent stake in an entity which indirectly owns the building.
Keppel Land China is investing US$158 million for a 30 per cent stake, the company said.
A co-investor is buying the other 30 per cent, making up a total investment of about US$525 million. A Keppel Corp spokesman said it was unable to disclose the investor's identity owing to confidentiality clauses.
Mr Ang Wee Gee, chief executive of Keppel Land and Keppel Land China chairman, said: "This acquisition is also in line with our strategy to scale up in high-growth cities, such as Shanghai, where Keppel Land China has established a firm foothold. We are confident about the opportunities in the commercial property market in Shanghai, one of China's key gateway cities."
Stake in Shanghai's Soho Hongkou that Singapore's Keppel Corp holds. A co-investor, whose identity is not disclosed due to confidentiality clauses, holds the remaining 30 per cent.
Ms Christina Tan, chief executive of Keppel Capital and managing director of Alpha, said: "Being the financial and commercial hub of China, Shanghai has seen the need for more high-quality and well-located developments in the city."
Keppel Land China is developing a number of other mixed-use projects on the mainland.
A Keppel Corp spokesman said that in Shanghai, Keppel Land China is also developing an office-cum-retail development, Park Avenue Central, in Jing'an District in Puxi.
The spokesman added: "In Tianjin, Keppel Land China is developing the mixed-use development, Seasons City, in the Sino-Singapore Tianjin Eco-City. Seasons City will feature three office towers and retail premises."
In Beijing, Keppel Land is developing a mixed-use property in Chaoyang District in the central business district. The development will feature three Grade A office towers and retail premises.
Keppel Land China is in 10 mainland cities with 20 projects and a pipeline of 33,000 homes.
In September last year, Keppel Land China and Alpha announced the sale of another Shanghai mixed-use development, Life Hub @ Jinqiao, for US$516.9 million.
A co-investor was also involved. Keppel said the investment had achieved an internal rate of return of over 20 per cent.
The Soho Hongkou mixed-use development offers a total leasable area of 70,042 sq m, which comprises 65,304 sq m of office space and 4,738 sq m of retail space. It had an impressively high occupancy rate of 97 per cent as of March this year.
Correction note: The photo caption has been edited to change the credit to Allianz.