Anbang Insurance Group is taking steps toward selling its Vancouver office buildings, only a few years after spending more than $1-billion on the prime downtown properties, according to a source with direct knowledge of the matter.
The Chinese insurance company is evaluating various Canadian banks and commercial realtors for the job of potentially selling four of the five Bentall Centre office towers that it owns, said the source, who was not authorized to speak on the record for reasons of confidentiality.
This represents the first concrete step state-owned Anbang has taken to reduce its holdings in Canada, amid a broad restructuring of the indebted Chinese insurer. Earlier this year, the Chinese government took control of the company due to escalating financial troubles and ousted the chairman on corruption charges.
The potential unwinding of Anbang’s Canadian portfolio represents a rapid about-face for the Chinese company in Canada. Anbang made headlines in 2016 when it bought Bentall Centre and encountered local opposition to a separate deal to acquire a large B.C. retirement-home chain. The deals raised concerns because of Anbang’s opaque ownership structure and ties to the Chinese government.
Anbang, which is one of several large Chinese companies caught up in Beijing’s anti-corruption probe, also bought an office building in Toronto and was partly responsible for driving up commercial real estate values in Canada.
Since March, financial regulators for the Chinese government have been seeking to restructure the insurer and slash its debt through asset sales. At the time, Anbang’s main Chinese regulator said “all or part of Anbang’s businesses, assets and debts/liabilities will be divested,” according to a translation from the University of Alberta’s China Institute.
Anbang is reviewing its portfolio of properties, including the Waldorf Astoria hotel in New York, and is reported to have retained UBS as one of its global financial advisers.
Anbang’s Canadian assets were not expected to be high on the list of asset sales. But about a month ago, Anbang asked some of the Canadian investment banks and commercial real estate firms for pitches to sell Bentall Centre, the source said.
“Something like this would attract a lot of interest,” said Chris Langstaff, LaSalle Investment Management’s head of Canadian research. “There is more new supply coming, but not so much as to drive vacancy rates significantly higher,” he said.
Anbang paid $1.06-billion for the four Bentall Centre office towers in 2016. That marks the most expensive commercial real estate deal in Vancouver, according to commercial realtor Cushman & Wakefield.
Today, that price appears reasonable for 1.45 million square feet of office space in Vancouver’s downtown core. The city’s office vacancy rates are at record lows and rent is climbing, as businesses seek space.
“They could get the same or more because clearly those buildings have appreciated significantly given the run-up in rents over the last little while,” said Bill Argeropoulos, head of research at commercial realtor Avison Young. “I think you would have multiple bidders. Whether it is a single buyer or a joint venture, that asset will move.”
The relatively unknown Anbang became a major player in Western commercial real estate circles when it started outbidding established investors for high-profile buildings. Over the past few years, Anbang and other Chinese companies were responsible for $5.6-billion, or about 40 per cent, of all foreign investment in Canada, according to CBRE data.
But the investments came with controversy. A patient-advocacy group and at least one B.C. legislator raised questions about the Chinese government’s involvement in senior living. In 2017, Ottawa eventually gave Anbang the green light to buy the retirement-home business.
Anbang’s Toronto office tower is known as 70 York Street. However, this asset is not considered as valuable as the Bentall Centre, especially now that the major tenant in 70 York, HSBC Canada, has announced it will move to a newer building.