A trio of Shanghai-based private equity investors have taken a majority stake in a 61 unit Manhattan condo development, as Chinese capital continues to find its way into the New York luxury residential market.
GEMA Capital Partners, with backing from Shanghai Prosperity Fund and with the assistance of Infinity Global Advisors recently closed on the acquisition of an unspecified stake in the 74,000 square foot (6,874 square metre) project at 517-523 West 29th Street in Chelsea, according to participants in the transaction who spoke with Mingtiandi.
The three Chinese companies invested an undisclosed amount to acquire control of the redevelopment project from New York developer Six Sigma NYC, which had purchased the existing self-storage warehouse last year for a reported $54 million. The New York developer had already put together plans for transforming the facility into condos, and according to public records had applied for permits related to redevelopment, according to research by Mingtiandi.
Building Affordable Luxury in NYC’s Chelsea
While plans have yet to be finalised, the group intends to take advantage of existing air rights to expand the current 54,000 square foot building, and to add retail space at the ground floor of the structure in Chelsea’s High Line Park neighborhood.
Part of the group’s strategy is to bring to market smaller units than many of the competing projects in the area, with the developers aiming for a price point of $1.8 million to $3 million, according to sources familiar with the project who spoke with Mingtiandi.
“Given the competitive real estate market in Manhattan, especially in Chelsea, partnering with Six Sigma to develop this Project through collaborative strategic positioning on the design and efficiency on the construction time frame is one of the many key reasons why we believe this project will be one of the most successful development in New York,” said GEMA’s Chan.
Shanghai Investors Join the NYC Club
Following the investment, Six Sigma is said to be retaining a significant equity stake in the project, and will remain in charge of development. GEMA and Shanghai Prosperity are jointly taking up most of the equity in the project, while Infinity Global will manage the asset.
The deal is the first US investment for Prosperity, which was ranked by Chinaventure.cn as one of the top 10 real estate investment funds in China in 2013, and according to its website now has over RMB 30 billion ($4.5 billion) in assets under management. On the mainland, the company has already partnered on projects with top developers including COFCO Real Estate (now Joy City), Gemdale Properties, and Shimao Real Estate.
For GEMA, the investment is the maiden cross-border deal for the firm founded last year by former Fosun Property Holdings Managing Director and Harvest Capital veteran Gary Chan and backed by family offices in Macau and Hong Kong. Infinity was set up as an alliance between the fund management platform of Israel-based Infinity Equity Group and investor Stephen Chi Hsu Chen of Ithaca Investment Partners.
Having established this initial deal, GEMA and Prosperity are on the lookout for further investment in US real estate. “We look forward to working closely with these partners to help bridge the gap between opportunities in the US and China,” Chan said.
The companies are aiming to sign deals for additional value-added projects in New York over the next six months, according to the former Fosun executive. With the long term goal of setting up a dedicated cross-border fund, the partners are also looking into opportunities for investments in non-traditional sectors, such as student housing and senior living, on the west coast of the US.