Chattanooga-based mall REIT CBL & Associates Properties, Inc. is making its first foray overseas with an investment in the subsidiaries of the Jinsheng Group, a Nanjing, China-based shopping center developer. CBL is entering the venture in partnership with Bain Capital, a Boston-based private equity, with CBL contributing $15 million and Bain Capital putting in $45 million.
The REIT chose Jinsheng Group for its international stint because the firm concentrates on shopping centers that contain home décor and furnishings tenants, a currently booming business in that part of the world, says Stephen Lebovitz, president of CBL. “We were looking for the right partner and this opportunity was brought to us by Bain Capital and we were able to become very comfortable and excited about it,” he notes.
Jinsheng's portfolio contains 7.1 million square feet of space, including two regional malls and four home décor shopping malls in Nanjing and Shanghai. In addition, the company has several projects in development. According to the terms of the deal, CBL and Bain Capital have the option to invest an additional $7.5 million in this venture within the next three years.
CBL, which concentrates on building middle market regional malls and power centers, has limited growth opportunities locally, analysts say. “Middle markets are generally less attractive than bigger cities and external growth from acquisitions and development is difficult to produce, as few buildings go on the block,” writes Morningstar analyst Heather Smith.