$4.55b financing deal in the U.S. marks continuation of shift by insurers to globalize investment portfolios
China Life Insurance (Group) Co, the country's largest insurer, has announced its involvement in a major overseas property investment－the latest in a series of real estate moves by the company, as it targets leading international markets.
The company has joined forces in helping finance the all-cash $4.55 billion acquisition by Singapore-listed Global Logistics Properties Ltd of a controlling 66 percent stake in Industrial Income Trust Inc, a Denver-based industrial real estate trust.
Partly owned by the Singapore sovereign wealth fund, GLP's portfolio of nearly 300 industrial properties is spread across 20 major markets. That includes owning and managing 48 million-square-meters of logistics facilities worth $33 billion in China, Japan, Brazil and the United States, said Ming Z. Mei, its chief executive officer.
It is not the first time GLP and China Life have worked closely together. Last year, the two partnered when GLP signed a $2.5 billion landmark agreement with a group of Chinese State-owned enterprises and leading financial institutions to enhance GLP's access to land, leasing demand and new business opportunities in China.
Listed in New York, Hong Kong and the Shanghai stock exchanges, China Life's shares have performed well on all the three markets. On Thursday, its share price rose 1.87 percent to close at 28.83 yuan ($4.54) in Shanghai and 0.87 percent to HK$28.9 ($3.73) in Hong Kong. In New York its share price rose 2.23 percent to close at $18.3 on Wednesday.
China Life's other recent headline overseas deals included joining with Ping An Insurance and global property developer Tishman Speyer in April this year, to launch a $500 million Boston development project, known as "Pier 4". It also co-invested with Qatar Investment Authority and Songbird Estates to buy "10 Upper Bank Street" in London's Canary Wharf, in 2009.
JLL, the international real estate investment and management firm, pointed out in its latest survey that Chinese insurance companies are making a structural shift to globalize their investment portfolios, and that includes the real estate sector. Continued loosening of outbound investment regulations since 2012, it said, is driving leading firms to actively seek real estate assets in key cities around the world.
Darren Xia, head of JLL's international capital group in China, said: "This leaves big potential for inflows to property, as China's insurance industry develops."
JLL forecasts that Chinese insurance groups are expected to allocate up to $240 billion into real-estate deals outside of the country over the years to come. Their property holdings, however, still remain a small 1 percent, compared with U.S. or European counterparts, which tend to have real estate allocation targets of 5-15 percent.
