China Investment Corporation (CIC) is investing in a US building for the first time since 2010, just a week after PERE learned that the Chinese sovereign wealth fund set up a dedicated real estate department and doubled its allocation to the asset class.
CIC is partnering with Chicago-based LaSalle Investment to buy Chicago’s AMA Plaza, a 52-story office building at 330 North Wabash Avenue, for $546.7 million, according to real estate data provider Real Capital Analytics (RCA). The American Medical Association is the building’s anchor tenant, taking up 290,000 square feet of the 992,154 square foot building, according to RCA. The funding split between the Chinese and American partners was not disclosed, and neither group could be reached for comment.
The sovereign wealth fund’s only previous direct investment in US real estate was the June 2010 purchase, and subsequent 2011 disposition, of a Manhattan office tower at 650 Madison Avenue, according to RCA.
CIC’s latest deal is Chicago’s largest office transaction of the year, according to RCA. Built in 1971, the office tower was the last and biggest US building designed by famous architect Ludwig Mies van der Rohe. The joint venture purchased the building from Five Mile Capital, an alternative investment firm based in Stamford, Connecticut.
The Chicago transaction comes as PERE reported last week that CIC has doubled its allocation to real estate to 10 percent, meaning the fund could ultimately own as much as $74 billion of real estate assets. PERE reported that is not thought that CIC manages anywhere near that much real estate at present.
CIC managed approximately $740 billion of assets as of the end of 2014, according to its latest annual report published last summer. From the Beijing-based state fund’s inception in 2007, CIC’s real estate investing activities have formed part of a wider private equity division. However, PERE understands that as of this year, CIC has been operating a standalone real estate group, called the Department of Real Estate. The department is led by real estate head Zhi Wei Cai, a long-serving executive focused on real estate investments at the state fund.
The state fund has been making inroads with some of the market’s largest transactions of late. In one example last year, it made headlines with the acquisition of Investa Property Trust, a vehicle containing nine prime offices in Australia, for A$2.45 billion (€1.6 billion; $1.8 billion), from Morgan Stanley Real Estate Investing (MSREI), Morgan Stanley’s real estate business. In another example in Europe, CIC teamed up with Paris-based real estate investment management firm AEW Europe for the purchase of 10 shopping centers in Belgium and France in a deal worth €1.3 billion.
The state fund has also been a meaningful backer of a small number of third-party managers, with commitments to opportunistic funds managed by MSREI, The Blackstone Group and Brookfield Asset Management.