CHINA - Asian real estate fund manager TAN-EU Capital and Chinese developer Shui On Construction and Materials (SOCAM) have entered into a joint venture to establish a $400m (€280m) club vehicle.
SoTan China Real Estate I will invest in 'special situation' real estate projects in high-growth, second-tier cities in China, focusing mainly on mixed-use developments anchored by residential space.
TAN-EU will provide half of the investment capital from institutional investors and manage the 'club partnership', while SOCAM will co-invest an equal amount and its affiliate SOCAM Asset Management will act as asset manager.
Rachel Renucci-Tan, who established TAN-EU Capital in 2009, stressed that the new vehicle was not a real estate fund, but a "club vehicle" and the first of its kind to be successfully launched in Asian region.
"Given the difficult environment for raising capital for real estate investments over the past year, and given that this is a first-time fund, we are very excited to have closed on this transaction in such a short period of time," she said.
"We look forward to working with our investors and with SOCAM in connection with the Partnership's investments over the coming years."
TAN-EU recently hired James Buckley, former head of Asia property multi-manager at Schroders, to head up its fund management and capital-raising initiatives.
SOCAM was listed on the Hong Kong Stock Exchange in 1997 and has been developing real estate, engaged in construction and producing cement in China since 1985.
Special situation real estate developments in mainland China has been a core business for SOCAM, and the company will continue to work in the area for the new club vehicle.
Philip Wong, chief executive at SOCAM, said: "SOCAM has been actively exploring ways to expand and strengthen our portfolio in this niche area of the property market in the mainland. Our partnership with SoTan will provide our investors with a solid investment platform."
TAN-EU expects that the series of austerity measures launched by the Chinese government in 2010 to dampen rising property prices will put financial pressure on smaller and medium-sized real estate developers, thereby creating an opportunity for special situation projects from the third quarter of 2011 and into 2012.