China’s Ping An Group Picks Up Lloyd’s of London Building for US$388 Mil

This week’s acquisition of a major foreign real estate asset by a Chinese company is Ping An Insurance Group’s purchase of the Lloyd’s of London building in the UK for ₤260 million ($388 million).

According to a statement from London-based property broker Savills Plc, China’s second-largest life insurer agreed to buy the building at One Lime Street in the City of London from a Commerz Real AG-managed fund. Commerz Real bought the asset for the equivalent of US$41 million in 2005.

According to Savills, the seller achieved a net initial yield of 6.1% on the sale.

The purchase of the Lloyd’s of London building, in one of the world’s most popular, and more importantly, visible property markets, can be seen as the latest trophy investment by a Chinese firm in international real estate.

In October last year, the Chinese government had made it easier for its insurers to invest in overseas assets, including real estate. Jones Lang LaSalle has estimated that Chinese investors may spend $5 billion buying overseas real estate this year, 25 percent more than in 2012.

“Asset management is one of Ping An’s major businesses, which includes the investment and management of insurance and third-party capital domestically and abroad,” the insurer based in Shenzhen, in southern China, said in an e-mail today, declining to specify its investments.

The Lloyd’s of London building has been called the Inside-Out Building because elevators, ducts, pipes and other elements are on the outside, and was designed by Richard Rogers. It’s leased to the Society of Lloyd’s until 2031, Savills said.

“The current liquidity and investor demand within the London market presented an ideal time for us to seek an exit,” Roland Holschuh, a member of Commerz Real’s management board, said in the statement.

In recent months several Chinese investments in overseas commercial properties have gained attention, including an acquisition of the GM Building in Manhattan by a group that includes the family of SOHO China CEO Zhang Xin and the investment by Dalian Wanda Group Chairman Wang Jianlin into two billion dollar hotels – one in London and the other in New York.