Blackstone and ICBC International have bought a 40% and 6% stake respectively in SCP, a Chinese shopping mall owner.
Financial details were not disclosed but the value of Blackstone's stake is about $400 million, according to a person close to the situation.
The investment in SCP represents Blackstone's largest mall investment in the Asia Pacific region and gives the firm a platform to continue to invest capital in Chinese malls, whether that is through development of new malls or acquisitions of existing malls.
“With China’s economy increasingly driven by domestic consumption, the retail sector has tremendous potential," said Chris Heady, head of real estate in Asia at Blackstone. Retail sales have grown on average by 16% per annum over the past ten years in China; SCP has grown above the average rate for the past decade.
According to a statement, SCP will have a total asset value in excess of US$2 billion following the deal.
SCP owns and manages 19 shopping malls under three shopping mall brands, Incity, SCP Plaza and One City. Its projects span cities across the Pearl River Delta, Yangzi River Delta and Bohai Economic Rim, with flagship projects being Shenzhen SCP Plaza, Suzhou Incity and Hangzhou Incity. The average occupancy rate is kept at around 95% and leases relatively short in order to manage turnover of tenants as rents rise. Ten years ago SCP was a state-owned company, then it was recapitalized.
Blackstone, the world’s largest private equity firm, is a major owner of shopping malls with more than 110 million square feet of assets across Asia, Europe and the US. It is also an active investor in real estate in Asia.
Stephen Schwarzman, Blackstone’s chairman and chief executive, said in Hong Kong last October that China’s economic slowdown was creating opportunities to invest.
In August the group agreed to buy Hong Kong-listed property and construction group Tysan Holdings - which owns real estate in mainland China - for US$322.6 million.
It has also made investments in Shanghai, Dalian, Nantong and Wuhan. In one deal Blackstone bought Shanghai’s Huamin Imperial Tower, which has 50,000 square meters of office space.
Its investment in SCP comes primarily from its Blackstone Real Estate Partners Asia fund.
ICBCI is a Hong Kong-incorporated, wholly owned subsidiary of ICBC, the world’s largest bank by market value. It serves as the overseas investment banking platform of ICBC group.