Harnessing synergies across the Group, Keppel Land China and Alpha Investment Partners (Alpha) announced on 26 June 2017 a partnership with a co-investor to acquire an office and retail mixed-use development, SOHO Hongkou in China, for approximately US$525 million.
Located in Shanghai’s Hongkou District, SOHO Hongkou is held 30-40-30 by a wholly-owned subsidiary of Keppel Land China, the Alpha Asia Macro Trends Fund (AAMTF) III and the co-investor respectively. The development offers a total leasable area of 70,042 sm, comprising office and retail space. Completed in 4Q 2015, it has a high occupancy rate of 97% as of March 2017, with tenants including Panasonic and China Pacific Insurance.
Mr Ang Wee Gee, CEO of Keppel Land and Chairman of Keppel Land China, said, “This is the second time that Keppel Land China and Alpha are harnessing strengths across the Keppel Group and collaborating to acquire a premium property in a strategic location in Shanghai, after Life Hub @ Jinqiao. This acquisition is also in line with our strategy to scale up in high-growth cities, such as Shanghai, where Keppel Land China has established a firm foothold.
“We are confident about the opportunities in the commercial property market in Shanghai, one of China’s key gateway cities. Leveraging the synergistic business models of Keppel Land China and Alpha, we believe that the latest acquisition of the mixed-use development, SOHO Hongkou, will further augment Keppel Land’s commercial portfolio as well as position us well to meet the growing demand for Grade A offices in the city.”
Ms Christina Tan, CEO of Keppel Capital and MD of Alpha, added, “Being the financial and commercial hub of China, Shanghai has seen the need for more high quality and well-located developments in the city. We are confident that Alpha’s AAMTF III is well-positioned to capture opportunities in this fast-growing market that is driven by sustainable urbanisation trends.
“The strategic partnership between Alpha and Keppel Land China is also testament to our commitment to grow our asset management business and achieve the best returns for our investors. In keeping with our disciplined investment approach, we will undertake the appropriate value-adding efforts that will not only preserve, but enhance the value of the asset over the long term.”
In September 2016, Keppel Land China and Alpha divested Life Hub @ Jinqiao, a mixed-use development in Shanghai and achieved an internal rate of return of over 20%. After the acquisition of the property in 2013, proactive asset management and innovative enhancement efforts saw the property maintain consistently high occupancy levels with a good mix of international and local retailers.
Designed by leading architect Kengo Kuma, SOHO Hongkou boasts an eye-catching structure and façade. A sustainable development, the building was conferred the United States’ Leadership in Energy and Environmental Design (LEED) Gold certification, and offers one of the best office specifications in the North Sichuan Road fringe CBD.