Blackstone, Wei family seek $282 mln debt for Shanghai skyscraper space-Basis Point

August 28
9:04 AM 2012

Private equity firm Blackstone Group and Taiwan's Wei family, the founders of instant noodle and MSG maker Ting Hsin International Group, are seeking to raise $282 million in five-year debt to back the purchase of a commercial property in Shanghai, Basis Point reported, citing unnamed sources.

The sources said a joint venture of Blackstone and the Wei family is in the process of buying the office floors of the Huamin Imperial Tower, a new commercial building in Shanghai developed by the Huamin Group, for around 2.7 billion yuan ($425 million).

Blackstone declined to comment. The company had $4.3 billion of equity in Asia, and $38 billion in real estate assets globally, as of last September. It has been expanding its presence in China, focusing primarily on residential and hotel development and overhauling shopping malls.

Cathay United Bank is coordinating the syndication of the term loan which consists of a $5 million onshore tranche and a $277 million offshore tranche, sources said. The offshore portion is being raised in Taiwan.

The sources said banks are being offered the offshore tranche for a margin of 425 basis points over Libor.

Banks that commit $40 million or more will receive a fee of 250 basis points and the mandated lead arranger and bookrunner title, while those committing $20 million will get a 150 basis point fee on the bullet offshore tranche, a source with knowledge of the deal said.

The Huamin Imperial Tower has 68 floors, and the sixth to 33rd floors will be Grade A office space, according to Huamin Group's website. The tower will also house the Hotel Sofitel Shanghai.

Thanks to low vacancy rates, rents and values of Shanghai office space have both risen rapidly since 2010. Average rents for Grade A space in the city have increased 13.2 percent, year over year, according to real estate consultancy DTZ.

With eight buildings in the pipeline in the second half of the year, though, rents are likely to come under pressure in the remainder of 2012.

This article is copyrighted by Reuters

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