GE Commercial Finance Real Estate will invest $20 million in a joint venture to develop residential real estate in China. Following its usual pattern of international ventures, GE Real Estate has allied itself with a local heavyweight, China Vanke Co. Ltd., the largest publicly listed real estate developer in China, GE announced March 22.
“The CITIC/Vanke China PropertyFund is the ideal vehicle for entry, as we are partnering with two of the most reputable companies in China,” says Michael Pralle, president and CEO of GE Real Estate.
“Also, we will be exploring investment opportunities in other asset types throughout China, including retail, hotel, office and industrial properties,” Pralle says. “We have a pipeline oftotaling several hundred million dollars which we will review as we move forward.”
Following this transaction GE Real Estate Asia Pacific will have real estate investments and operations in Japan, South Korea, Australia, New Zealand, India and China.
The joint venture fund, CITIC Capital Vanke China Property Development Fund, plans to invest $100 million to $150 million to develop homes in specified economically developed regions of China, including the Pearl River Delta Region, the Yangtze River Delta Region, the Pan Bohai Region and other selected inland cities.
CITIC Capital, a member of the CITIC Group (CITIC) Chinese transnational financial services conglomerate, will manage the fund, and GE Real Estate will be the exclusive development manager for all of the fund’s investments. A CITIC group entity and China Vanke Co. will make an unspecified but “substantial” capital commitment to the fund, according to GE. The fund will be domiciled in the Cayman Islands and governed by Cayman Islands law.
Mark Hutchinson, president of GE Real Estate Asia-Pacific, said residential properties are the best route to enter the Chinese market because the robust sector enjoys the most liquidity of any commercial segment.
“The value of this partnership exists in learning this market and establishing a confident presence in multiple business centers throughout China,” Hutchinson said. “Also, as the sole strategic investor we have a right to further co-investment, giving us the potential to scale up the portfolio managed by this partnership significantly.”
Last month, GE Real Estate announced its entry into tertiary markets of Slovakia with the purchase of three, grocery-anchored retail shopping center. GE Real Estate owns more than $35 billion in core assets with 34 offices located throughout North America, Europe, Asia, and Australia/New Zealand.