Blackstone closing in on Soho China acquisition worth US$3b

Hong Kong

BLACKSTONE Group is nearing an agreement to acquire office developer Soho China in what would be its biggest real estate investment in Asia's largest economy, people familiar with the matter said.

The private equity firm could announce a deal as soon as this week, the sources said, asking not to be identified because the matter is confidential.

Soho China could be valued at about US$3 billion in a transaction, they said. The developer has a market value of about HK$19.8 billion (S$3.38 billion) based on its last closing price.

Soho China shares were halted from trading on Tuesday in Hong Kong, pending an announcement under the city's takeover code. The suspension came after its stock price surged 48 per cent last week, the most since the company went public in 2007.

While talks are in their final stage, they could still drag on or fall apart, the sources said. A representative for Blackstone declined to comment, while a representative for Soho China did not immediately respond to a request for comment.

Soho has been seen as a takeover target since early 2020, as a lack of new assets in its pipeline and declining office rents in key Chinese cities put mounting pressure on its profits.

The Beijing-based developer said in March last year it was in talks for a potential deal with overseas financial investors that could lead to a bid for the company.

Blackstone was in discussions about a deal for Soho, though negotiations stalled due to concerns about financing and the impact of the coronavirus pandemic, Bloomberg News reported at the time.

Soho said in August that all previous talks with potential investors had been terminated.

Soho has developed 54 million square feet of commercial projects in Beijing and Shanghai, said its website.

Its key assets include the signature Bund SOHO in Shanghai and the landmark Wangjing SOHO in Beijing, designed by Zaha Hadid, the first woman to receive the prestigious Pritzker Architecture Prize.

Blackstone's real estate arm has about US$196 billion of capital under management, said its website.

The investment firm reached a US$1.1 billion deal in November to buy control of the biggest urban logistics park in southern China's Greater Bay Area.

In late 2018, Blackstone acquired a Shanghai mall and office complex from Mapletree Investments for US$1.2 billion, people with knowledge of the matter said at the time.

It agreed the next year to buy stakes in Chinese shopping centres in Xi'an and Zhengzhou from American real estate investment trust Taubman Centers. BLOOMBERG