Blackstone to make first China exit

The New York-based private equity and real estate giant is set to sell the Channel 1 shopping centre in Shanghai to a subsidiary of Hong Kong-listed New World Development Co in a deal valued at RMB1.46 bn.

The Blackstone Group will soon sell its first real estate investment in China after agreeing the RMB 1.46 billion (€169.3 million; $228 million) sale of the Channel 1 shopping centre in Shanghai with a subsidiary of Hong Kong-listed New World Development Co.

The firm purchased a 95 percent stake in the then-named Changsou Commercial Plaza for approximately RMB1 billion in late 2008 on behalf of its Blackstone Real Estate Partners VI fund which closed on $10.9 billion in 2007. Besides the Channel 1 shopping centre, the fund is thought to hold few other Chinese investments.

Acquired vacant from Hong Kong-based real estate developer VXL Capital immediately after its redevelopment, Blackstone has since leased about 90 percent of the 42,000 square metre asset, increasing its value prior to its sale which was agreed late last week, according to an announcement by New World.

The deal is expected to complete in November.

Blackstone was unavailable for comment but one market source described the deal as demonstrating lingering appetite for Chinese retail real estate.

He said: “Despite all the news you are reading about the China market there are still people out there confident and optimistic about the long-term prospects particularly for consumption-orientated real estate like shopping malls.”