LaSalle Sells Stakes in Two Shanghai Multi-Family Assets to China Life Fund

LaSalle Investment Management has sold stakes in two Shanghai multi-family assets to a vehicle managed by China Life Capital, while retaining majority ownership through its Asia opportunistic strategy and continuing to operate the properties under its Cozi platform.

The insurer-backed recapitalisation injects fresh domestic capital into the portfolio via a preferred equity structure, allowing LaSalle to generate liquidity while maintaining control and long-term upside participation through its LaSalle Asia Opportunity Fund VI, the Chicago-based firm said Wednesday in a release.

The transaction covers two projects in Yangpu district with a combined 997 units, both repositioned from office use into rental housing under a value-add strategy and now stabilised at around 95 percent occupancy. The disposal comes as premium multi-family vacancy in Shanghai stood at 20.1 percent in the first quarter, easing 0.3 points from the prior three months, while average rents rose 1.4 percent to RMB 177.50 ($26) per square metre per month, according to Savills.

“The successful completion of a complex recapitalisation in China to return original invested capital while continuing to retain majority equity stake is a testament to LaSalle’s ability to manufacture liquidity in the current environment, through disciplined structuring and deep relationships with domestic capital partners,” said Steve Hyung Kim, who takes over as Asia Pacific head of the JLL subsidiary this Friday.

Yangpu Conversions

Financial terms of the deal weren’t disclosed. The two assets, Cozi East Bund and Cozi Xinjiangwan, were developed as part of LaSalle’s push into China’s rental housing sector through its Cozi-branded platform.

LaSalle acquired the East Bund property from Landsea Green Management in 2022 for RMB 253 million, converting the 22-storey Huangxing Building into a 368-unit apartment project that opened in March 2024.

Located near Ningguo Road metro station just outside Shanghai’s inner ring, Cozi East Bund targets young professionals with smaller-format units renting at around RMB 5,000 per month for one-bedroom apartments.

The larger Cozi Xinjiangwan project, comprising 627 units across three buildings, was assembled through LaSalle’s 2022 acquisition of assets from C&D Real Estate for RMB 575 million and launched in the first quarter of 2024.

Situated in Yangpu’s Wujiaochang area near major tech employers including ByteDance and Meituan, Cozi Xinjiangwan is aimed at white-collar tenants, with one-bedroom units renting for roughly RMB 7,700 per month.

Both properties are part of a three-asset Shanghai rental housing strategy launched by LaSalle in 2021, alongside a 590-unit Hongqiao project now being marketed for sale after leasing challenges in that submarket.

Cozi Hongqiao was converted from a distressed retail and hotel asset acquired by LaSalle in 2021 alongside Jingrui Holdings for RMB 438 million, with the mainland builder holding a 25 percent stake in the asset.

Exit Strategy

The recapitalisation of the Yangpu assets aligns with broader trends among foreign fund managers seeking to partner with domestic institutions like China Life to achieve mainland exits.

“Executing this transaction required deep local knowledge, strong relationships and careful sequencing,” said LaSalle China head Selena Shi. “By partnering with aligned domestic capital and leveraging our dedicated multi-family operating platform Cozi, we were able to advance the strategy in a way that connects domestic institutional requirements with our objectives as foreign investors.”

Shanghai’s residential leasing market remains in flux, with new supply weighing on rental growth as operators focus on improving occupancy and tenant retention, Savills said in its first-quarter update.

The quarter saw the opening of one premium multi-family project in the city — LaSalle’s Cozi Lianyang in Pudong — adding to the growing stock of professionally managed rental housing and underscoring the firm’s continued expansion.

Savills said a growing pipeline of government-subsidised rental housing is capturing demand from budget-conscious tenants, forcing market-based operators to compete more aggressively on pricing and lease flexibility.