BOC adds to China's portfolio of NY property

Updated: 2014-12-10 12:37

By Amy He in New York and Zhu Wenqian in Beijing(China Daily USA)

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BOC adds to China's portfolio of NY property

Rendering of 7 Bryant Park in New York, a planned skyscraper purchased by the Bank of China.

Bank of China's purchase of a midtown Manhattan skyscraper continues a trend of Chinese acquiring trophy properties in the city, said US real estate experts.

"There's no doubt that it is a really, really high-quality asset. It's consistent with what you'd expect from a company like Bank of China," said Scott Latham, vice-chairman of New York capital markets at Jones Lang LaSalle, an investment company specializing in real estate.

"They are an extremely well-respected company. As these large, highly-visible companies from mainland China are coming into the US and making deals, it raises the visibility of what's going on in the overseas investment arena for other Chinese companies, and I think ultimately it is leading to much more comfort on the part of those Chinese companies that aspire to invest outside of their own geographies," he said.

Hong Kong-based Bank of China Group Investment Ltd, an affiliate of state-owned lender Bank of China Ltd, signed an agreement to acquire office space at 7 Bryant Park, sources said on Tuesday.

"Given the emerging size of the Chinese banking sector and how much capital Bank of China has, it's a natural evolution for them to diversify their holdings, and other asset classes around the world. We're seeing that in other countries as well. It's not surprising that China is doing this," said Daniel Quan, professor of real estate and finance at Cornell University's School of Hotel Administration.

The 30-story tower in midtown Manhattan is scheduled to be ready for occupancy early next year, and will become the newest embellishment to the skyline. The building is under construction along Sixth Avenue between West 39th and West 40th streets at, just south of the Bank of America Tower at One Bryant Park. Bryant Park is behind the New York Public Library, which faces Fifth Avenue.

Bank of China Group Investment Ltd is set to take over the property rights upon its completion.

"The company has visited and researched many properties in New York City, and 7 Bryant Park excels with its location and construction quality, which is in line with our investment standards," said Wei Da, managing director of the asset management division at Bank of China Group Investment Ltd.

The firm is negotiating the price with developers, Hines, Pacolet Milliken Enterprises and JP Morgan Chase & Co's asset management branch, said Wei.

Wu Shiqiang, president and CEO of the Bank of China USA, said the deal was significant for the bank's overseas business.

"The building has a great location in midtown near Bryant Park and the Bank of America building," said Wu.

Latham told China Daily that BOC had been looking to expand its occupancy in New York City, with the bank being "the most active" in the marketplace of Chinese lenders. It already occupies some small buildings on Madison Avenue and had inquired with neighbors about more space.

"Because they were unable to assemble a large-enough envelope of space to occupy, they shifted gears and started to think about potentially occupying space in other parts of the city," said Latham. "I think this situation is the best of all worlds because Bank of China was interested in investing in the US. And they combine an investment now with the ability to occupy brand new space in a very, very well-located trophy building."

In October, China's Anbang Insurance Group Co bought the Waldorf Astoria hotel in Manhattan from Hilton Worldwide Holdings Inc. Last year, Ping An Insurance Group Co acquired the Lloyd's of London building from a Commerz Real AG-managed fund.

Lu Ming, research head of Cushman & Wakefield, said part of the reason for Chinese enterprises' preference for US commercial property targets is that they are optimistic about the US economy.

"Every individual company has its own specific consideration. But the shared reason is the prospect of asset value appreciation and the appreciation of the dollar. Holding dollar-denominated assets can also help diversify the asset portfolios," Lu said.

Zheng Yangpeng and Jiang Xueqing contributed to this story.

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