Fosun Seeks More U.S. Deals After New York Tower Purchase
Billionaire Guo Guangchang, chairman of Shanghai’s Fosun International Ltd. (656), is seeking to expand the company’s U.S. commercial real estate investments after the acquisition of New York’s 1 Chase Manhattan Plaza.
Fosun International, the investment arm of China’s biggest closely held industrial group, is interested in buying more properties in New York as well as in other “gateway” cities such as San Francisco, Guo said in an interview. The company is considering apartments and hotels as well as offices, he said from New York, where he traveled to complete the purchase of the lower Manhattan landmark from JPMorgan Chase & Co. (JPM)
“We don’t have a fixed number we want to invest,” Guo, 46, said through a Chinese-to-English interpreter. “We think in terms of long-term opportunities.”
Fosun bought the 2.2 million-square-foot (204,000-square-meter) Chase Manhattan tower for $725 million. It is the biggest purchase of a New York building ever by a Chinese company, and caps a year in which Chinese investors made some of the city’s most high-profile real estate deals.
Buyers include the family of Zhang Xin, the billionaire co-founder of Soho China Ltd., which purchased a stake in midtown Manhattan’s General Motors Building; and Shanghai-based, state-owned developer Greenland Holding Group Co., which agreed to acquire a 70 percent share of Atlantic Yards, a residential and commercial project in Brooklyn.
Guo’s fortune has jumped 58 percent to $4.1 billion this year, according to the Bloomberg Billionaires Index. His conglomerate is investing overseas as it seeks to diversify its holdings, which include property, mining and drugs.
Fosun owns a stake in Greek duty-free store operator and jewelry maker Folli Follie. In July, the Shanghai-based company won approval from regulators to take over the French resort operator Club Mediterranee SA with Axa Private Equity, renamed Ardian after it was spun off from Axa Group. Fosun also agreed in September to buy a stake in Italian suit maker Raffaele Caruso SpA.
In China, Fosun sold 9.1 billion yuan ($1.5 billion) of properties in the first half of 2013 through its real estate unit Forte Land, an increase of 78 percent from a year earlier, according to the company’s interim report.
Fosun studied the New York real estate market for four years, Guo said. He described it as an “honor” to own 1 Chase Manhattan Plaza, the building David Rockefeller developed as part of a campaign to preserve downtown’s relevance as a financial capital. The 60-story tower was completed in 1961.
“The most important is the market research about the building, but Mr. David Rockefeller’s role is a plus,” he said.
The company held a “delivery ceremony” yesterday on the 60th floor of the tower, said Dan Wilson, a spokesman.
Fosun understands the complexities of the lower Manhattan office market, said Alain Chang, vice president of Fosun Property Holdings Ltd. Contraction in the financial-services industry has left more than 6 million square feet of vacancies, and two new World Trade Center skyscrapers have about 2.4 million square feet of unrented space.
“To put it simply, the challenges are already factored into the price,” Chang said in English. The skyscraper, designed by architect Gordon Bunshaft, “is a special product, very versatile, located at a high point in downtown, suitable to all types of tenants.”
In addition to technology, media and financial firms, Guo said they “have received a lot of positive feedback from Chinese companies” about renting space there.
The location in the center of lower Manhattan offers convenience and good subway connections, while being away from the traffic around the Trade Center area, Chang said. They also see their building as providing tenants a stronger presence than they would have in the larger Brookfield Place New York, an 8 million-square-foot complex near the Hudson River. The landlord, Brookfield Office Properties Inc. (BPO), is trying to lease more than 2 million square feet of former Merrill Lynch & Co. space in the property.
Fosun expects to get about 1 million square feet back from JPMorgan in about a year, Chang said. The tower also has several levels below its plaza that could be made into retail space, he said.
The company is open to a partnership with a local real estate company to redevelop the building, Chang said.
“We have not found the right one yet,” he said. “We’ve been approached by many, including some of our competition” in the acquisition of the tower.
Fosun has established a small office it has rented at 888 Seventh Ave., a building owned by Vornado Realty Trust, Chang said.
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