MGPA completes Shanghai office buy for Asia Fund III

The Asia and Europe focused private equity real estate firm has made its second investment in China for the region’s largest ever private equity real estate fund. The transaction follows last year’s reallocation of resources from Japan to China and Australia.

MGPA, the Asia and Europe focused private equity real estate firm, has edged closer to concluding the investing for its Asia’s largest private equity real estate fund with the acquisition of a newly completed office building in Shanghai in a deal valued at RMB263.5 million (€32.4 million; $42 million).

The firm announced today it had acquired j-Tower, a Grade A office spanning 163,000 square feet of gross floor area connected to the mixed-use, residential and retail Life Hub @ Anting development, from Chongbang, a consortium of Hong Kong and Singapore developers.

The investment was made for the MGPA Asia Fund III, the largest opportunistic real estate investment fund ever raised in the region. It was established in 2007 and collected $3.9 billion from investors including Canada Pension Plan Investment Board and the New York State Teachers’ Retirement System.

The investment is one of the latter investments for MGPA Asia Fund III, which has seen its investment period extended by 18 months. The extension covered approximately $500 million in equity and a meaningful proportion of that is expected to be invested in China.

PERE understands that the fund has approximately $240 million of its capital left.

It marks the second occasion MGPA has deployed capital from that fund into Chinese real estate, following the purchase of a 50 percent stake in Galleria Chengdu, a retail mall in Chengdu, for a reported RMB422 million. The fund’s portfolio also includes both commercial and residential investments in Japan and Thailand although the bulk of the capital has been deployed into two giant offices in Singapore.

John Saunders, CEO Asia, MGPA, said: “This is a good opportunity to buy a quality commercial property in Shanghai. Anting is a base for major Chinese and international automotive companies with convenient transport links to downtown Shanghai but has an imbalance of Grade A office space in the area for the level of commercial activity. We anticipate strong leasing interest from both domestic and foreign firms looking for quality and convenience.”

“j-Tower marks our second deal in China for MGPA Asia Fund III following the acquisition of a retail mall in Chengdu in 2011. China continues to be an important focus for MGPA and we look favourably on investment in retail/commercial properties in tier one and tier two cities”.

Indeed China took more of a central focus for the firm last year when it made way by scaling back its Japanese division. As PERE revealed, the firm diverted much of its resources in Japan to its new office in Sydney and to grow out its Chinese function.

The firm manages approximately $11 billion of assets and has about 240 staff across offices in Asia and Europe.