Singaporean-listed CapitaLand has raised US$556m in the first closing of its maiden discretionary real estate debt fund, in what is set to be one of China’s largest property debt vehicles.
CapitaLand is looking to raise $750m for the CREDO | China fund, which will invest in offshore US dollar-denominated subordinated loans for real estate in China’s first- and second-tier cities.
The fund will focus on loans against commercial, retail, residential, logistics and industrial properties, CapitaLand said in a statement.
The company, which will hold a 10% stake in the fund, expects to raise the remaining equity from major institutional investors later this year.
“CREDO | China will broaden CapitaLand’s fund offerings to real estate debts, going beyond our existing 15 private equity funds, which focus primarily on direct investment in property projects,” said CapitaLand president and group CEO Lee Chee Koon.
CapitaLand China and investment management president Lucas Loh noted: “CREDO I China comes at an opportune time as a significant volume of China’s commercial real estate loans are due for refinancing within the next few years; while bank regulatory changes and deleveraging measures have tightened the amount of credit available to borrowers, prompting them to turn to non-bank lenders.”
CapitaLand cited Bloomberg data that showed some US$70bn of commercial real estate loans in China were due to expire and would likely need refinancing within the next five years.
The fund launch comes just weeks after CapitaLand announced its acquisition of Ascendas-Singbridge in a deal that will strengthen the buyer’s fund management platform.