Blackstone to make first China property purchase

Shortly after the firm revealed that it is opening an office in Beijing, Blackstone is set to acquire a commercial property in Shanghai for $158m.

The Blackstone Group is about to make its first property purchase in mainland China, acquiring a commercial property in Shanghai for 1.1 billion yuan ($158 million; €102 million), according to Chinese state media. The plaza is made up of a six story, 25,312-square-meter shopping mall and commercial complex.

The purchase, made from Hong Kong-listed VXL Capital, would give Blackstone a 90 percent stake in Changshou Commercial Plaza, a development in Shanghai's Putup district. VXL will retain a 10 percent stake in the property, according to China Securities News.

Blackstone has become increasingly active in China following the $3 billion investment in the private equity firm by the country's sovereign wealth fund, China Investment Corp, last year. Earlier this month, Blackstone chairman Stephen Schwarzman revealed, during a presentation at the Bernstein Strategic Decisions Conference in New York, that the firm had just signed the lease for a new office in Beijing. That office follows those opened recently in Tokyo, Mumbai and Hong Kong.

Schwarzman told delegates: “We are very rapidly growing. From 2005 to the current day staffing has grown by 100 percent as we move around the world. It is a business with enormous dynamism and 1,200 people.”

Blackstone opened an office in Mumbai in 2005 to handle private equity and real estate investments and followed that up last year when it opened a satellite office in Hong Kong from where former Hong Kong financial secretary Antony Leung is directing operations as chairman of Blackstone Greater China. Earlier this month, the firm added new impetus to the region when it announced the launch of a hedge fund business, Blackstone Altius Advisors, which it called a new “event-driven” strategy focusing on opportunities in the Asia Pacific region. That business is being headquartered in Hong Kong.

In an interview with PERE in March, president and chief operating officer Hamilton “Tony” James said the firm was busy staffing up the Hong Kong office with real estate professionals. At the same time, he said the firm was adding professionals in Tokyo and Mumbai. Speaking of Asia, he told PERE: “Those markets will be a much larger portion of our real estate investing activity than they have been historically.”

Blackstone's other activities in Asia include a fund of hedge funds and two closed-ended mutual funds, The India Fund and The Asia Tigers Fund. Its 10th real estate fund, closed in April on $10.9 billion and its fifth global buyout fund, closed on $21.7 billion in August 2007, are active in the region.