Soho China made its first acquisition outside its home base of Beijing, paying about $360 million to a Morgan Stanley real-estate fund for a 52-story office and retail tower on the edge of one of Shanghai’s main business districts.
Hong Kong-listed Soho said it would lease the office space in the building or sell it in pieces (that sounds wrong, somehow, but the writer cannot think of a way of putting it more felicitously), starting in September. Soho also will manage the building, which it is rebranding as The Exchange – Soho.
The transaction offers a profitable exit for the Morgan Stanley fund, which purchased the then-unfinished building in August 2006 for about $245 million and did construction and upgrade work before selling it to Soho.
The timing of the purchase suggests that Soho sees upside in the current environment.
Soho Chairman Pan Shiyi said, "Although this is our first foray into Shanghai, it certainly won’t be our last."
Mr Pan said he still saw commercial property in Shanghai as "undervalued" compared with the residential market, adding that he had little interest in investing in the city’s residential property market. "We want to buy where prices are cheap, rather than chasing rising prices," he said.
Online Wall Street Journal said for Morgan Stanley the transaction is a key divestment.