Anbang Insurance Group has hired a broker to sell its Vancouver office towers and plans to put the properties up for sale early next year, according to sources with knowledge of the matter.
The Chinese insurance conglomerate has tapped commercial realtor CBRE to sell four of the five Bentall Centre towers that it owns, said the sources, who were not authorized to speak publicly because of confidentiality reasons. CBRE has started contacting a pool of potential buyers about the coming sale, the sources said. But the commercial real estate company has not sent marketing material or other official documents to potential investors.
The hiring of CBRE brings the state-controlled Anbang closer to divesting its Canadian properties. Chinese regulators have been restructuring the troubled company after seizing control last year and ousting Anbang’s chairman on corruption charges.
It’s a remarkable about-face for Anbang, which burst onto the commercial property market scene in 2014 when it paid exorbitant sums for real estate such as the Waldorf Astoria hotel in New York.
CBRE declined to comment. Anbang could not be reached for comment.
The Bentall Centre is in a prime spot in Vancouver, where office vacancy rates are at record lows and rents have been soaring.
Anbang paid $1.06-billion for the four Bentall Centre office towers in 2016 – still the most lucrative commercial real estate deal in Vancouver’s history.
Although the sale is expected to attract a lot of interest, it is unclear whether Anbang will recoup its investment.
First, the timing of the sale is not optimal. Fourteen office towers are under construction in downtown Vancouver, according to Cushman & Wakefield data, which will increase supply and potentially curb rental rates.
Many investors believe the real estate market has peaked and are reluctant to make big purchases after a near-decade-long commercial property boom.
In addition, only a small group of buyers can handle a $1-billion-plus acquisition. Many of those are the Canadian pension funds such as the Canada Pension Plan Investment Board and they have been reducing their exposure to domestic real estate.
“Many of the big pension funds in Canada continue to increase their international real estate exposure, sometimes selling part interests in some sizable Canadian assets to do so,” said Chris Langstaff, LaSalle Investment Management’s head of Canadian research. “They’re not looking to add more Canadian exposure despite the ‘trophy’ nature of an asset like this,” he said.
CPPIB, for example, is making a big push in China. Ivanhoe Cambridge, the real estate company owned by Quebec’s pension fund, sold its stake to Anbang a few years ago. And although Bentall Centre is considered a “trophy” property, it is a large complicated asset with four different buildings, retail and underground parking.
Anbang and other Chinese companies were largely responsible for driving up commercial property prices in Canada. Anbang blew past its competitors when it bought Bentall Centre, as well as when it spent more than $1-billion for a seniors' living chain in B.C., called Retirement Concepts.
Now there is distrust among some players in the real estate industry. Some commercial property firms have been barred from working with Anbang.
Anbang also owns an office building in Toronto. That property is not included in this sale.