China Life Insurance Invests More Than $1 Billion in U.S. Warehouses
November 04 2015 - 08:40PM
Dow Jones News
SHANGHAI—State-owned China Life Insurance Co. is investing more
than $1 billion in U.S. warehouses, according to a person with
knowledge of the deal, marking its largest cross-border real-estate
purchase to date.
China Life will take about a 30% stake in warehouse operations
that have recently been acquired by Singapore-listed Global
Logistic Properties Ltd., the person said. Global Logistic
Properties, a warehouse owner part-owned by Singapore's
sovereign-wealth fund, said in July it plans to buy the assets of
Denver-based Industrial Income Trust Inc. The acquisition was
completed Thursday.
Global Logistic Properties said in a statement Thursday it is
establishing a new fund to manage these assets and that China Life
Insurance and two institutional investors have jointly invested in
66% of the fund.
Global Logistic Properties and China Life didn't immediately
respond to requests for comment.
China Life is joining the ranks Chinese insurance companies that
see value in foreign real estate. Last week, a unit of Ping An
Insurance (Group) Co. of China formed a $600 million fund with U.S.
property fund Blumberg Investment Partners to invest in real-estate
assets across the U.S., including logistics assets. Ping An,
China's largest insurer by premiums, also has purchased two office
towers in London since July 2013.
In April, non-insurance subsidiaries of Ping An and China Life
took a one-third stake each in a $500 million development project
in Boston, joining with Tishman Speyer Properties. In June 2014,
China Life acquired a 70% stake in London's 10 Upper Bank Street,
which has more than a million square feet of office space along the
Canary Wharf. Anbang Insurance Group, the firm that bought the
Waldorf Astoria hotel in New York last year, recently bought an
office tower in Toronto.
Chinese insurers are looking to expand their overseas real
estate portfolios as a hedge against slowing economic growth at
home. Apart from Ping An, Chinese insurers allocate only 1% of
their capital to real estate compared with the 5%-15% allocation by
their peers in the U.S. and Europe, according to data from property
brokerage JLL.
"This leaves big potential for further inflows to overseas real
estate," said Darren Xia, head of JLL's International Capital Group
of China, adding that Chinese insurers could potentially allocate
up to $240 billion in real estate abroad based on current
metrics.
Until 2012, regulations prohibited Chinese insurers from buying
foreign property, but they have since been given looser quotas to
invest in foreign assets, including stocks and bonds abroad. The
China Insurance Regulatory Commission now allows insurers to invest
at most 15% of their total assets in offshore holdings including
real estate.
Logistics real estate in the U.S. has been the darling of
investors this year, as tenant demand and rents grow alongside the
country's economic growth. Prologis Inc., the world's largest
industrial landlord, completed its acquisition of warehouse owner
KTR Capital Partners for $5.9 billion in June.
In its latest earnings report, China Life Insurance said its
third-quarter net profit plunged 73% from a year earlier to 2.5
billion yuan, without giving a reason. Its nine-month net profit,
however, rose 23% to 33.8 billion yuan.
Write to Esther Fung at esther.fung@wsj.com
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(END) Dow Jones Newswires
November 04, 2015 20:25 ET (01:25 GMT)
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