The Real Estate Behind The World’s Largest Sovereign Wealth Funds: China Investment Corp
Sovereign wealth funds are boosting their investments in commercial real estate to diversify their portfolios and increase yields. China Investment Corp, the world's second-largest sovereign fund, manages about $814B worth of assets, according to the Sovereign Wealth Fund Institute, and has been upping its property investments as part of its long-term strategy. As of July 2016, the firm has made more than 40 real estate investments in North America, Europe, Asia and Oceania, resulting in an inflow of $10.6B. Bisnow previously brought you to the real estate of Norway's sovereign fund, now let's check out what CIC has bought in the past 24 months.
Port of Melbourne
Location: Melbourne, Australia
Date: September 2016
The fund grabbed Australia's business port for $7.3B in a consortium with Australia's Queensland Investment Corp and the Future Fund. Australian leaders gave CIC the green light, showing they still welcome Chinese infrastructure investment; it was the second-largest private deal on record, according to Reuters.
Carnival Corp JV
Date: September 2016
The Chinese fund entered a $4B joint venture in late 2015 with the world's largest leisure travel company, Carnival Corp, to invest in some real estate of the sea. The fund ordered two new Carnival ships to be built in China through this JV — in which it holds a 60% interest — in September by domestic manufacturer China State Shipbuilding Corp. The ships are expected to deliver in 2022 and will further propel growth in China's cruise market.
Australian Office Portfolio
Date: October 2015
In the biggest direct real estate deal in Australia's history as of October 2015, CIC won a $1.79B bid for Investa Property Group's office tower portfolio. The deal came as part of the sale of the $9B Australian property asset manager. The majority of the portfolio, a whopping 90%, is in Sydney and Melbourne, and CIC fought off heavy competition from competitors Blackstone Group, DEXUS Property Group and Abu Dhabi Authority for the portfolio.
European Retail Portfolio
Location: France, UK
Date: July 2015
A CBRE Global Investors managed fund unloaded its $1.4B retail portfolio to China's sovereign fund and affiliates of AEW Europe. The properties — consisting of two shopping centers, several malls, a retail park and individual store formats — are throughout France and Belgium. At the time the properties accounted for 2.4M SF of retail space leased to brands including H&M and Zara.
Date: November 2012
Looking to expand its UK holdings, the fund grabbed a 10% stake in London's Heathrow Holdings in 2012. The fund tended to gravitate to Britain as the nation was more open to the idea of China owning key assets in its country. The stake was not limited to Heathrow airport, but included holdings in UK airports Stanstead, Southampton, Glasgow and Aberdeen. CIC paid roughly $726M for its interest.