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Carlyle may buy Vanke’s properties
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GLOBAL private equity firm Carlyle Group is in talks with China Vanke Co to acquire some of Vanke’s commercial properties through assets or shares acquisition, the biggest Chinese property developer said yesterday.
Vanke is negotiating with the PE giant’s Carlyle Asia Investment Advisors Ltd and expects to enter a memorandum of understanding in the next few days, it said in a filing to the Hong Kong stock exchange. No details of the deal were given.
Vanke’s statement came after two people with knowledge of the matter said both parties were in advanced talks on Carlyle buying stakes in nine shopping malls.
One of the sources said the deal was valued at between 6 and 7 billion yuan (US$977 million and US$1.1 billion), while the other said it could be worth up to 10 billion yuan. Both declined to be named as details of the talks were private.
The location of the malls was not disclosed.
The deal would give Carlyle access to China’s commercial real estate market where properties carry yields of around 4.5-6 percent. Rental margins of commercial properties are at around 60-80 percent, higher than the 30-50 percent of residential projects.
Vanke would also benefit from the deal, which would help it quickly generate returns as a slump in the residential market, and a slowing economy, tightens liquidity for Chinese developers.
China Resources Land, another big property developer, has also said it was looking into real estate investment trusts and property funds to generate cash.
“Relying solely on cash contribution from residential projects is difficult to support a further and faster development of our commercial projects,” China Resources Land Chairman Xiangdong Wu said last week.
PE firms can provide capital through financing or structure investment funds with developers, but some firms have also acquired whole buildings or taken equity stakes in developers.
Blackstone Group in November bought a 40 percent stake in unlisted Shenzhen-based shopping mall group SCP Co for around US$400 million.
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