Warburg Pincus-backed Nova Property Investment has joined forces with Hong Kong-based real estate investment manager InfraRed NF to acquire a Shanghai shopping centre for RMB 465 million ($73.8 million) as the real estate development startup continues to build up its China rental housing platform.
The duo plans to convert the property, Hongkou Bailian Shopping Mall in Hongkou District, into a rental apartment complex supported by retail amenities, according to a statement from InfraRed NF. The buyers’ declaration did not disclose the identity of the seller.
The project will yield 400 rental apartment units, as well as retail space led by food and beverage outlets, as Nova seeks to add to its portfolio of more than 36 sharing economy real estate projects in mainland China.
InfraRed to Leverage Nova’s Residential Expertise
“We are delighted to make this investment which provides a compelling opportunity for us to deliver
superior returns in keeping with our value-add strategy,” said Hans Kang, Chief Investment Officer at InfraRed NF in the statement. “We see further strong investment opportunities and our deal pipeline is extremely healthy with both mezzanine and value-add deals.”
The property is located at 699 Tongfeng Road in Hongkou, some 1.3 kilometres from the Xizang North Road subway station, and is scheduled to be completed in the third quarter of 2019. The apartment complex is expected to yield approximately 43,000 square metres (462,848 square feet) of space with two floors underground and five floors above ground.
The asset was acquired below replacement cost, said the Hong Kong-based firm, which has a strategy of acquiring underperforming retail and hotel properties with the potential to be converted into mixed-use assets. The joint venture will “leverage InfraRed NF’s extensive expertise in retail operations with Nova’s strong serviced apartment conversion track record,” the company added.
InfraRed NF Teams Up With Nova Again
The transaction is the second joint venture between InfraRed NF and Nova Property, after the pair bought the Shanghai Puxi Kaiyuan Hotel in Shanghai’s Jing’an District for $95 million in July last year. That project is currently being redeveloped as rental apartments, and is slated to open in the fourth quarter of this year.
US private equity firm Warburg Pincus co-founded Shanghai-based Nova Property, which is active in redevelopment projects as part of its core business of building and operating rental apartments. Nova set up a RMB 20 billion ($3.2 billion) fund for redevelopment of commercial properties in China with mainland developer Sunac in March. The fund is designed to invest in acquiring and redeveloping office buildings, hotels and shopping centres in China’s first- and second-tier cities.
InfraRed NF is a joint venture between the UK’s InfraRed Capital Partners and Hong Kong-based Nan Fung Group’s Vervain Resources. The firm has recently appointed a pair of investment directors Ivan Fang and Nicholas Jiang in Shanghai to expand its operations in China.