Blackstone Group LP, the world’s biggest manager of alternative assets including private equity and real estate, agreed to buy a 40 percent stake in Chinese shopping mall developer and operator SCP Co.
The purchase, the price of which was not disclosed, is the New York-based company’s largest mall investment in Asia to date, said Chris Heady, head of Blackstone’s regional real estate business. Blackstone is investing about US$400 million in SCP, according to a person with knowledge of the matter, who asked not to be identified because the information is private.
The company, which has been among the biggest buyers of property in Australia and India, is further seeking to boost such investment in China as rising income and urbanization drive demand.
“SCP is a fantastic collection of real estate assets and a very well-respected company,” Heady told reporters in Hong Kong yesterday.
“The retail space in China is one where we believe there is going to be significant growth over the medium to long-term as the country repositions itself to be more dependent on domestic consumption growth,” he said.
ICBC International Holdings, a Hong Kong unit of China’s largest bank, also agreed to buy a 6 percent stake in SCP, helping take the Shenzhen-based developer’s total asset value to more than US$2 billion, according to an e-mailed statement from SCP.
SCP owns and manages 19 shopping malls under its Incity, SCP Plaza and One City brands, according to the statement. It has developed and operated malls with an accumulated gross floor area of more than 4 million square meters across cities in the country’s Pearl River Delta, Yangzi River Delta and Bohai Economic Rim, it said.
Among its tenants are Wal-Mart Stores Inc, Inditex SA’s Zara and Hennes & Mauritz AB, SCP chairman Ding Liye said in Hong Kong yesterday. It keeps the vacancy rate at its malls below 5 percent, he said.
SCP was founded in 2003 with investment by the Shenzhen government, according its Web site and Ding. The government is no longer a shareholder, Ding said.
International companies such as Carlyle Group LP and Morgan Stanley have invested in various SCP projects, Ding said. Carlyle agreed to buy 49 percent stakes in SCP’s Suzhou and Hangzhou Incity malls, according to a statement posted on SCP’s Web site in May.
Blackstone is particularly attracted to SCP’s focus on the rising middle class instead of luxury brands, Heady said.
“It will give us a platform to continue to invest capital in China in the mall sector,” Heady said, adding that Blackstone may provide further financial support should SCP have growth opportunities through new project development or property acquisitions in the future.