October 26, 2012 / 10:51 AM / 5 years ago

Schwarzman says Blackstone to buy Shanghai office tower

HONG KONG, Oct 26 (Reuters) - Blackstone has agreed to buy the Huamin Imperial Building in Shanghai, a source with knowledge of the matter said, an office tower which media reports say is valued at around RMB7 billion ($1.12 billion).

Earlier, Stephen Schwarzman, CEO and co-founder of Blackstone, the world’s largest alternative asset manager, told reporters on Friday the firm had committed to buy a Shanghai office building, without naming the property.

The source confirmed the building as the 50,000-square-metre Huamin Imperial.

“It’s a situation that became available as a result of some of the pressure among real estate developers that’s occurring in China,” Schwarzman said at Blackstone’s Hong Kong offices.

The Huamin Imperial, a grade A office and 5-star hotel complex in Shanghai’s Jing‘an district, is 95 percent complete, and Blackstone will finish the construction and lease it out, said the source, who could not be named as details of the deal were private.

Schwarzman expects Blackstone, which manages $205 billion in assets and whose portfolio companies employ more than 730,000 people globally, to become among the largest buyers of commercial real estate in Australia and India.

“We are going to be a bit more aggressive, particularly on real estate,” Antony Leung, Blackstone’s Greater China chairman and former Hong Kong financial secretary, said.

At more than $13 billion, Blackstone’s latest real estate fund dwarfs its rivals, giving it a huge advantage on deals, said Schwarzman.

“If no one else can write that cheque, what we choose to pay is more or less what the price is,” he added.

Blackstone has been relatively quiet on the private equity deal front in Asia, despite increasing its staff by around one-third over the past two years to around 35 private equity professionals, and over 100 staff across the region now.

Schwarzman, who founded Blackstone in 1985 with Peter Peterson, said the firm believes the slowdown in China has hit bottom, but Hong Kong-based head of international private equity Michael Chae was still cautious.

Chae said the performance of a lot of the larger private equity deals in China in recent years “had not been great”.

“We feel good about having been selective and disciplined in that time period,” Chae added.

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