global asia real estate fund concludes its first acquisition
Global Investment House "Global" , a leading investment bank and asset management company, announced today that Global Asia Real Estate fund has concluded its first Real Estate acquisition in the People’s Republic of China, as part of the fund’s investment strategy.
Mr. Sameer A. Al-Gharaballi, Executive Vice President at Global - the Fund’s Manager- said that the fund finalized the purchase of a distressed Shopping Mall in a prime location in the city center of Weifang, Shangdong Province, in the People’s Republic of China.
The fund conducted the investment with two joint venture partners, Titan Capital, a Singapore-based private equity firm and Pan China, a commercial real estate group in China. The total value of the investment is USD8.8 million.
The retail sector in China has been one of the best performing sectors over the past few years. The Fund along with its partners intend to reposition the Mall as a new generation mall catering to the needs of the youth. Currently, there are no malls in Weifang targeting the youth population. The Mall is located in a prime commercial area with well-developed surroundings and more than one access road leading to the site .
Weifang’s GDP has grown steadily over the last five years at CAGR 18% (Note: overall China GDP growth 2002-06 has been about 10%). With the Olympic Sailing competition taking place in neighbouring Qingdao, Weifang is set to enjoy spillover economic benefits from being located between Beijing and Qingdao.
Mr. Al Gharaballi also stressed that the fund initially evaluated a number of opportunities in China and eliminated many of them, as they did not meet the investment criteria of the fund. “This subject opportunity has passed through our strict due diligence process.”
According to Cushman & Wakefield Capital Asia, the fund’s advisor, this investment can be expected to provide gross returns in excess of 25%.
He added that the exit strategy from this investment is by way of selling the shares of the company that was formed for this project or by way of sales proceeds of an enbloc sale of the project.
He concluded by saying that the fund is currently looking at two very attractive deals, one in China and the other in India. Both are currently going through our intensive due diligence process and will be disclosed to the public once those deals are finalized.
