Tan-EU Capital acquires Chinese retail site
SOTAN China Real Estate I, the $400 million fund co-managed by Hong Kong-based real estate private equity firm Tan-EU Capital, has made its first China investment.
The fund acquired a 102,000 square-meter site in Tianjin's developing district Wuqing, with a plan to build 45,000 sq m of 2-3 storey street-front retail shops, a 30,000 sq m shopping mall, a 40,000 sq m apartment complex and a 700-berth car park.
Wuqing - which saw its GDP and population grow by 21.1% and 12.7%, respectively, in 2010 - is 25 minutes from Beijing by high-speed rail.
"The acquisition is in line with our strategy of targeting under-developed areas with strong growth potential accelerated by improving infrastructure," said Rachel Renucci-Tan, founder of Tan-EU Capital. "Our project will create a synergy by offering a variety of fashion, F&B and convenience-based stores and will not only benefit from the demand of local residents but also Beijing and Tianjin day trippers."
Tan-Eu Capital and Hong Kong-listed ShuiOn Construction and Materials (SOCAM), jointly closed their SoTan China Real Estate I LP club vehicle in 2011. SOCAM is a member of Chinese developer Shui On Group, and is principally engaged in property, cement and construction businesses.
Institutional LPs have contributed $200 million to the fund, while SOCAM has invested another $200 million for a combined partnership value of $400 million. The fund targets special situations real estate projects in tier-two cities in China, focusing on residential and mixed-use developments.
As the state government has been tightening lending to the real estate sector with an aim of cooling price and tamping speculation, private equity has increasing involved in providing alternative source for property developers who are thirsty for capital.
Noah Holdings, the Shanghai-headquartered third-party financial advisory company, is seeking to launch a real estate fund worth as much as RMB18 billion ($2.85 billion) to target cash-strapped developers. The fund will be raised in partnership with Chinese real estate services company E-house. Leading Chinese developers include the likes of Evergrande, R&F Properties and Huayuan have already expressed interest.
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