CapitaLand Sets Up Pair of RMB Business Park Funds In China 

CapitaLand Investment continues to demonstrate its ability to raise funds domestically in China, teaming up with 10 local investors to establish RMB 4 billion ($550 million) in new renminbi-denominated vehicles, according to an announcement on Thursday.

CapitaLand’s new renminbi funds will each hold a single business park asset, with the fund management unit of CapitaLand Group identifying Ascendas i-Link, a Shanghai office property from its own balance sheet, as one of the two acquisitions.

 “CLI is accelerating its onshore RMB capital raising momentum at a time when it is becoming increasingly important for investment managers to build up domestic fund-raising capabilities,” said Simon Treacy, the company’s CEO of private equity real estate. “As a global real estate investment manager with an intimate knowledge of China, CLI is able to source for opportunities and structure unique deals that will deliver sustainable quality returns for onshore investors.”

The pair of RMB vehicles were announced around five months after CLI rolled out its first local currency fund in China, with that RMB 700 million single-asset strategy acquiring an office property in central Shanghai.

Shanghai Asset Finds New Owners

The SGX-listed firm said its China Business Park Core RMB Fund I (CBPCF I) raised RMB 380 million ($52 million) to acquire the Ascendas i-Link property in Pudong’s Zhangjang High Tech Park while CBPCF II, the second fund in the batch, has garnered another RMB 3.6 billion ($492 million) in fresh capital to acquire a further business park asset.

“We are expanding our RMB funds to acquire business parks which have proven to be resilient in operating performance,” said Puah Tze Shyang, chief executive officer of CLI China. “We remain confident in the long-term prospects of China given the size of its economy, and will continue to leverage the increasing pool of domestic capital to grow our business in China.”

10 local investors new to CapitaLand’s strategies, including securities firms, trust companies, state-owned enterprises and insurers contributed RMB 3.2 billion or nearly 90 percent of the total funding raised for the two vehicles.

CLI is retaining a 10 percent stake in CBPCF I, with 90 percent held by four domestic investors.

Located at 111 Xiangke Road in Zhangjiang High Tech Park, nearly 100 percent of Ascendas i-Link’s 31,685 square metres (341,054 square feet) of gross floor area is leased out, primarily to companies in services, electronics and biomedical distribution.

CBPCF II, the second fund in the batch, is also a single-asset vehicle and is in the process of acquiring an unnamed mainland business park in a transaction scheduled to be completed towards the end of the year.

While a CLI spokesperson declined to identify the second property or its seller, the company did note that the LEED Gold certified asset is “located in a Tier 1 city with strong fundamentals and good quality tenants” and is almost fully occupied.

The Singapore-based firm is taking a 20 percent interest in the strategy with six local investors having agreed to buy a combined 80 percent of the vehicle. Further financial details or the identities of the investors were not provided.

Business Parks Endure

China’s business park sector is gaining more attention from property heavyweights in the region, with CLI unveiling its suburban office vehicles just four months after Hong Kong logistics giant ESR acquired its first-ever life sciences asset in the country last July.

ESR bought the two-building ACGT Park campus in Zhangjiang Pharma Valley, a biotech cluster in Zhangjiang High Tech Park, from mainland developer Yango for an undisclosed sum.

A report by Colliers in July showed leasing activity in Shanghai business parks bounced back in the second quarter as lockdowns were gradually being eased. Net absorption or the ratio of occupied space to available floor area went up five percent in the second quarter compared to the preceding three months, while rents inched up by 0.4 percent during the same period.

Demand for Shanghai business parks was largely driven by companies involved in biomedicine, integrated circuits and artificial intelligence and will likely continue to do so until 2025, the property consultancy said.

China Faithful

With China being one of CapitaLand’s primary markets, Treacy said his team is also looking for opportunities in other new economy assets on the mainland beyond business parks, including data centres and logistics.

As of 30 June, CLI has S$20.6 billion ($14.5 billion) in funds under management across its 10 private vehicles with 28 mainland properties in its portfolio.

The CapitaLand unit in June launched its first ever RMB fund worth RMB 700 million that was used to pick up an office building in Shanghai. The property was at least 90 percent leased at the time of acquisition.

Last month, the Singaporean firm acquired the Borui Plaza office building in Chaoyang district through an online auction picking up the distressed asset from creditors of the previous owner for RMB 2.04 billion or around 30 percent below the current market value of the property.