Tishman Speyer Attracts Chinese Money

Two Chinese insurance companies have chosen a Tishman Speyer project for their first equity investment in the U.S. real estate market.
Pier 4, Boston

Pier 4, Boston rendering

Two Chinese insurance companies – China Life Insurance Group Co. and Ping An Insurance Co. – have chosen Tishman Speyer’s Pier 4 Boston waterfront project for their first equity investments in the U.S. real estate market.

“Tishman Speyer is inevitably one of the best partners for China Life’s property investments in America. It is a good start for China Life, which will expand its real estate investing in America, and it will promote closer cooperation in our world,” China Life Investment Holding Co Ltd. officials said in a prepared statement.

While the New York-based real estate giant didn’t disclose the amount invested by the Chinese insurance firms, Reuters reported they are funding the majority of the Pier 4 office and condominium project. Citing an unnamed source with knowledge of the deal, Reuters said the companies were expected to invest about $167 million each in the first phase of the $500 million project. The Wall Street Journal, which broke the story Tuesday, reported each of the Chinese companies were taking one-third shares and the other third would be owned by a Tishman Speyer fund that would be the manager.

Tishman Speyer stated in a news release the companies would be investing alongside Tishman Speyer Real Estate Venture VIII. The investments are being made through China Life’s subsidiary, China Life Investment Holding Co. Ltd., and Ping An’s real estate investment platform, Pin An Real Estate Co. Ltd.

Tishman Speyer will be the general partner and manage the day-to-day development of the project in Boston’s hot Seaport District. The global developer and real estate owner of major assets like Rockefeller Center purchased the property in December. It reportedly paid $70 million for the nine-acre property from New England Development.

Plans call for a 13-story, 373,000-square-foot building that will be primarily office space; a nine-story, 100-unit luxury residential condominium building; and a three-level below-grade parking facility. Both buildings will have ground-floor retail and restaurant space. The plan also includes a one-acre public park at the site which had been the location of a popular eatery, Anthony’s Pier 4 Restaurant. Construction is scheduled to begin later this year with construction of both buildings completed in 2018. Tishman Speyer expects to seek LEED-Gold certification for the project.

The move comes as Chinese investors are increasingly making large investments in U.S. commercial real estate. Chinese insurance companies had been barred by the Chinese government from making investments in foreign properties until 2012. While this is the first U.S. investment for China Life and Ping An, they have been active in London.

For Tishman Speyer, it is an extension of the relationships it has made during the last several years as it began large development projects in China. One of its developments is The Springs in Shanghai’s Yangpu District, where Nike Inc. built a corporate campus. Other Tishman Speyer projects have been built in Tianjin and Chengdu.

“Tishman Speyer had been an active investor and developer in China for more than a decade,” Co-CEO Rob Speyer said in the release. “In that time, we have forged strong, productive relationships with both China Life and Ping An. We are really pleased that they have chosen to join us on this project.”

Ping An Real Estate officials said in a statement that the deal was “another step forward for us in developing a strong ongoing business relationship with Tishman Speyer.” The company added that it was “confident that they will be a very good partner for us in our first foray into the United States real estate market.”

While Tishman Speyer owns two Boston office buildings – One Federal St. and 125 High St. – the Pier 4 project is its first ground-up development in the city. It is a speculative project but the Speyers have said they expect demand for both the office and residential space. The Seaport, also known as the Innovation District, has become the epicenter of new construction in Boston. Late last year, a joint venture of Berkshire Group, WS Development and Boston Global Investors broke ground on a $600 million, 1.5-million-square-foot residential and retail property.