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February 14, 2014

Bay Area commercial property draws more Chinese money

San Francisco Chronicle

Andrew S. Ross

Please stand by for an influx of more Chinese money.

San Francisco commercial real estate giant Kidder Mathews is partnering with a Chinese real estate consortium "to act as a bridge for Chinese business investment which wants to come to the Bay Area," the firm said.

The partner in question is Tsinghua Real Estate CEO Chamber of Commerce - that's its name - an association of 3,000 Chinese real estate agents with what appears to be a considerable amount of money to spend.

"Along with taking advantage of China's incredible economic growth, our members have gained vast experience in real estate development and other related fields," said Henry Xu, deputy secretary general of Tsinghua Real Estate. "Our members have also acquired experience and also abundant capital."

Founded 10 years at Beijing's Tsinghua University, the group is described as "a non-profit social organization and national industry association established under the guidance of China Real Estate Chamber of Commerce" and the university.

Tsinghua is no stranger to the Bay Area. One of its branches bankrolls InnoSpring, a U.S.-China tech incubator in Silicon Valley that launched in 2012. Last month, the university opened a separate X-Lab Silicon Valley Launchpad at InnoSpring "to provide a base for Tsinghua researchers, students, and entrepreneurs and embed them in InnoSpring's network of talent, investment, and ideas."

Few details of the partnership have been made public - the Chinese play their cards pretty close to the chest - other than it wants to acquire commercial and residential real estate in the Bay Area. Retail and tech are among the sectors of interest, according to Skip Whitney, Kidder Mathews executive vice president and head of the firms' China Services Group.

Tsinghua might have to get in line.

Last year, China's largest real estate developer, Vanke Group, broke some serious ground in San Francisco, investing $175 million in a luxury condo development headed by Tishman Speyer at 201 Folsom St. In July, the public-private Hunters Point-Treasure Island project, run by Lennar Urban, rounded up $77 million from a consortium of overseas, mostly Chinese investors under the federal EB-5 green-card-for-foreign investors program. The Kor Group got a $40 million contribution under the same program for its makeover of the historic Renoir Hotel on San Francisco's Mid-Market.

Over in Oakland, the chairman of another Chinese investment firm, Zarsion Holding Group, said in December he was ready to commit more than $1 billion to the Brooklyn Basin housing project near Jack London Square, led by Oakland's Signature Development Group.

But wait, there's more: This one from Shanghai to New York City.

In December Fosun International, China's largest conglomerate, bought the 60-story One Chase Manhattan Plaza from JPMorgan Chase for $725 million.

Local angle: Attorneys in the San Francisco office of DLA Piper, which represents Fosun International, played a major role in putting together the deal. By the way, Fosun, along with France's Axa Private Equity, is looking to acquire Club Mediterranee, a.k.a. Club Med, for $730 million.

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