SOHO China has agreed to acquire a top Shanghai office building owned by the real estate investment arm of Morgan Stanley for 2.45 billion yuan ($359 million), the Chinese developer said.
The deal marks SOHO China's first entry into the highly competitive Shanghai property market, in which some economists have already said properties are overpriced.
Previously, SOHO China focused on projects in Beijing.
Reuters reported earlier this month that Morgan Stanley Real Estate was in advanced talks with SOHO China for the sale of The Exchange, a building on Shanghai's historic Nan Jing Road.
The Exchange, a 52-storey office and retail complex, is also known as Dong Hai Plaza, but SOHO China will rebrand it as “The Exchange – SOHO” after the deal, according to an emailed statement from SOHO China.
The Exchange - SOHO was already about 30% rented, with the remaining portion to be sold or leased by SOHO China in the coming months, the company said in the statement.
“Our business model of selling commercial properties in the most dynamic city centre areas ... has already earned considerable success in Beijing,” said SOHO China Chairman Pan Shiyi in the statement.
“We are confident that this model can be applied to Shanghai as well,” said Pan, an influential Chinese property tycoon.
The SOHO China statement also confirmed an earlier Reuters report regarding the amount that SOHO China paid to Morgan Stanley for the Shanghai property.
The Exchange - SOHO is among Shanghai's tallest skyscrapers at 217 meters, according to the statement.
Morgan Stanley began investing in Shanghai properties in 2003 and undertook real estate projects with local partners including Shanghai Forte Land and Shanghai Dragon, an investment arm of the city government.
Morgan Stanley Real Estate bought The Exchange for about 2 billion yuan in 2006.
“The transaction between Morgan Stanley and SOHO China is truly one of mutual benefit,” said Zhang Xin, SOHO China's chief executive, in the statement. “For (Morgan Stanley), the sale allows them to realize value and cash out on an investment property that is now close to being ready for the market.” (Reuters)