- Deal among first successful exits by a foreign fund to an RMB fund; signifies future exit opportunities due to high demand and low availability of similar properties
SHANGHAI, May 17, 2013 /PRNewswire/ -- DLJ Real Estate Capital Partners, LLC ("DLJ RECP") announced the successful sale of Shennan Industrial Office and R&D Park ("Shennan"), a high-quality development project located in the Minhang District of Shanghai, China to an RMB real estate fund. The sale of the project, which is a joint venture between DLJ RECP and Foresight Investment (Shanghai) Co., Ltd. ("Foresight"), is among the first successful transfers from a foreign fund to an RMB fund.
"Exit options for foreign funds are rapidly growing because there is a shortage of high-quality industrial properties in China and an influx of institutional capital seeking cash-flowing assets. Properties like Shennan tend to offer a higher yield than commercial space, and the current low interest rates are making them especially attractive to domestic fund investors and insurance companies," said Jim Yip, Managing Director of DTZ China Investment, the real estate services firm that advised on the sale. "Moving forward, we expect growth of RMB funds and insurance companies to provide more liquidity for the entire property sector in China."
According to estimates by DTZ, RMB denominated real estate funds raised close to the equivalent of USD 5 billion in 2012, and domestic insurance companies currently have the equivalent of approximately USD 72 billion available for direct real estate investments.
Shennan is a high quality 225,000 square foot complex featuring six industrial buildings ranging from three to eight floors. The development is conveniently located just two kilometers from Metro Line 5 and a 30-minute drive from People's Square in Shanghai's city center. The property achieved an occupancy rate of more than 95 percent.
DLJ RECP and Foresight have successfully completed four investments since the partnership began in 2006 – three in Shanghai and one in Shenyang. The four properties, including Shennan, total over 2.4 million leasable square feet and have a portfolio lease-up rate of over 99 percent with various multinational tenants. The Shennan joint venture was established in 2007 and construction was completed in October 2008.
"The on-the-ground expertise of our long-term partner, Foresight, was instrumental in executing the development on schedule, within budget, and to the highest quality standards," said John Lien, Managing Director of DLJ Real Estate Capital Partners. "The quality of the project was critical to our success leasing to multinational tenants and positioned the property to be sold to a domestic RMB fund."
Andy Rifkin, Managing Partner of DLJ Real Estate Capital Partners, added, "Shennan represents the successful execution of our strategy in China to cater to multinational tenants and is aligned with our firm's global commitment to forge long-term business relationships with partners such as Foresight that result in the acquisition and development of high-quality properties in major urban markets."
"Our long term partnership with DLJ RECP is now bearing fruit. DLJ RECP has worked diligently with us to create value through top-notch market research, lease and expense management, financing expertise, and exit negotiations," said Charles Xue, Chairman of Foresight.
"The successful exit of Shennan can be attributed to DLJ RECP's strategic planning and the effective asset management execution of the team over the last six years," concluded Dr. Stanley Chan founder and Managing Director of Stanley & Partners Investment Management Co. Ltd., an advisor to Foresight.
ABOUT DLJ REAL ESTATE CAPITAL PARTNERS, LLC
DLJ RECP is a leading global investment firm focusing on real estate and real estate-related assets. DLJ RECP was founded in 1995 and has offices in New York, Los Angeles, Hong Kong and Tokyo. DLJ RECP manages a series of real estate private equity funds with total capital commitments in excess of $4 billion. The DLJ RECP funds have acquired 180 investments representing approximately $15 billion in gross transaction value throughout North America, Western Europe and Asia. DLJ RECP takes a rigorous property-by-property approach to investing. The firm's strategy is to acquire well-located assets with high intrinsic value and to enhance that value through creative repositioning and intensive management strategies.
ABOUT FORESIGHT INVESTMENT (SHANGHAI) CO., LTD.
Foresight is a leading real estate investment, operation and asset management company based in Shanghai. Foresight is a partner of choice in China for many reputable Japanese conglomerates. Foresight was established in 1993 by a group of Chinese nationals with experience developing real estate in the U.S. To date, Foresight has developed over 18 million square feet of properties in China including residential, industrial and commercial projects.
