Client Case Study: Chinese Real Estate

Recently, our firm worked with a Hong Kong based real estate developer in setting up their first Private Equity fund. We were engaged to provide strategic counsel and to raise capital for a $500 million to $1 billion distressed real estate fund in the Greater China market. The General Partner for this fund is one of Hong Kong’s most prestigious developers. This fund leverages the expertise of a seasoned group of over 400 China-based professionals and a global team of real estate and finance partners.

Based on their experience in the market, our client has determined that a unique opportunity exists to acquire distressed real estate assets at very low multiples. These assets properly managed will be expected to create significant returns for our client and their investors over the next six to seven years.

The challenge

In the current market environment, institutional investors were being extremely selective as to both the focus and structure of the funds that they committed to. Noting these market realities we were required to identify investors that had a detailed understanding of the Chinese Real Estate market and to concurrently structure the fund in a way that would be attractive to both the investors and the General Partner. A well-structured investment fund must be developed and executed so that sufficient assets can be acquired and managed. These assets will be sold once sufficient returns have been realized creating value for the fund investors and managers.

The solution

We managed a global investor outreach program that leveraged our extensive database of institutional investors actively investing in distressed real estate in international markets. Further, we advised on designing the structuring and strategy of the fund and introduced and overseen the fund’s contracting with one of the industry’s leading real estate advisory practices as a preferred services provider making the fund even more attractive to investors.

Working with the senior management of the fund, we assessed the market and assist with developing a well-structured China-based fund to attract reputable, well-established institutional investors. Once the fund has been established, we will continue to advise the management of the fund and the investor base on strategic issues associated with the Chinese market and the ongoing management of the fund.