KKR, AEW Look to Sell China Property in Shanghai, Beijing

KKR and AEW are the latest companies to pull back from China as the country’s property value decline continues to take its toll.

The firms are looking to offload commercial real estate properties for a likely loss, Bloomberg reported.

KKR is looking to sell a Beijing apartment complex and a hotel on Shanghai’s Bund waterfront area, sources familiar with the matter told the outlet. AEW is looking to sell the HeXa International Plaza office tower and mixed-use Jing IN International Center property in Beijing and the Shanghai Pudong Development Bank building.

No deals have been reached, though it’s unlikely KKR and AEW will get back the same amount or more than what they paid for the properties.

The firms reportedly expect to recoup amounts that surpass the acquisition loans they secured to buy the buildings, though those amounts are only between 50 and 60 percent of the prices they originally paid for the properties.

AEW purchased the Class A office project in central Beijing in 2020 through a partnership with local private equity investor Hony Capital, before rebranding it as HeXa International Plaza. KKR acquired the 3,000-unit multifamily development in suburban Beijing the following year.

China’s ongoing real estate market woes have prompted foreign investors to sell their properties after more than a decade of wading further into the country’s market.

Buyers from outside the country invested nearly $140 billion in offices, malls, warehouses and data centers in the past 15 years, though they’ve begun to retreat as values go down the drain thanks to the country’s economic downturn and an excess of supply, according to MSCI Real Capital Analytics data cited by the outlet.

The country unveiled new policies last year aimed at stimulating foreign investment.

The State Administration of Foreign Exchange removed restrictions on companies using foreign exchange income under capital accounts for purchasing non-self-use residential property. The agency also relaxed laws that previously held back buyers from using foreign exchange for property purchases, which would allow international investors to settle payments faster.

— Chris Malone Méndez