Hong Kong-based real estate investment manager Kailong is raising a new, US dollar-denominated fund focussing on properties in Greater China, with a target size of $500 million.
Ivan Ho, who has just been promoted to the newly create role of CEO for Hong Kong, will lead the fundraising while overseeing the company’s Hong Kong team. The new vehicle follows the successful deployment of all of the capital in Kailong’s first US dollar fund for Greater China.
Familiar Face Given Top HK Role
Before formally taking charge of the real estate investment firm’s Hong Kong business, Ho previously served as Managing Director of Kailong. In tandem with his promotion, three other executives have changed their titles to clarify the division of responsibilities at the firm, including Kailong Group founder Hei Ming Cheng shedding his former Chief Executive designation to become Founder & Chairman.
Denise Woo, formerly a managing director of Kailong in Shanghai, has taken the mantle of COO & Head of Asset Management, overseeing the company’s operations and managing the entire asset portfolio. Rounding off the executive quartet, Jerry Geng, who had also served as a managing director based in Shanghai, is now CEO of China, taking charge of the firm’s mainland business with a focus on investment and business development.
Kailong Aims for Encore After Deploying First USD Fund
Founded in 2004, Warburg Pincus-backed Kailong held a final close of $238 million on its first US dollar fund, the KaiLong Greater China Real Estate Fund, in May 2015. The company has invested some $270 million, including co-investment capital alongside the fund, in eight deals across Greater China – three each in Hong Kong and Shanghai, and one each in Beijing and Dalian.
The new Greater China fund continues the investment strategy of its predecessor, with a focus on value-added commercial and industrial office deals, primarily in first-tier mainland cities and Hong Kong, Ho told Mingtiandi.
Kailong last year acquired three en bloc properties in Hong Kong’s Sheung Wan area for a total price of around HK$1 billion, with plans to convert the group of properties into a pair of modern office buildings offered for strata sale this year.
Value-Add Strategy Pays off
Established in 2004, Kailong has found success by scooping up, managing and refurbishing commercial assets. The company bought the Kings Hotel in Hong Kong’s Wanchai from shop tycoon Tang Shing-bor for a reported price of about HK$1.35 billion ($173 million) last November, with plans to convert the 193-room hotel into a commercial building.
Reports indicated that the buyer is angling to turn the hotel into a co-working centre — a strategy that would replicate Kailong’s earlier success refurbishing a run-down hotel in Shanghai into a chic commercial tower leased out to flexible office giant WeWork. The investment firm sold that value-add property for a sum reported to exceed 500 million ($74 million) in 2016, doubling its equity investment in the asset 18 months after buying it.
Also in Shanghai, Kailong last December achieved a successful exit on an eight-storey office building in the Zhangjiang Hi-Tech Park, after buying the asset via its first USD vehicle in 2014 and upgrading it last year.
In total, Kailong has invested over $2.7 billion in 47 assets, claiming excellent risk-adjusted returns on the 28 it has exited. The company has set up five yuan-denomated funds totalling RMB 2.8 billion since 2010, along with its US dollar vehicles including a pair of Outbound Investment funds, and two Hong Kong dollar funds.
The Kailong team totals over 60 people, with offices in Beijing and Chengdu in addition to Shanghai and Hong Kong.