Angelo Gordon makes $200m Shanghai play

The New York-based fund manager has bought a Shanghai serviced apartment out of its Asia Fund II, hoping to get value-added returns by catering to the expatriates of the city.

Angelo, Gordon & Co, the New York-based alternative investment firm, has made a $200 million purchase of a Shanghai serviced apartment complex.

The capital for this investment – the 27th it has made in China since 2005 – is understood to have come from the firm’s $616 million AG Asia Fund II, which closed in 2010. Fund II is understood to be almost 75 percent invested and the firm is plotting to launch its third Asia-focused vehicle sometime in the first quarter of 2014, as PERE has previously reported.

The leverage on the deal was revealed to be approximately 60 percent. To attain the value-added returns it is seeking, Angelo Gordon is planning to make use of the complex's unused space like car parks, according to a firm spokesman.

With a floor area of approximately 893,000 square feet, the apartment complex comprises around 500 units, and is located in the central business district of Shanghai. Developed by an  international real estate developer, the apartments were designed expressly to serve expatriates. Facilities within the complex include a supermarket, restaurant, sports facilities and a kindergarten. 

“As China’s high value service sector continues to grow, we believe the demand for high-quality, well-located serviced apartments by large multinational and domestic corporations will continue to be very strong,” Wilson Leung, managing director and head of Asia real estate, said in a statement.

The complex also has an international school located close by, which Angelo Gordon pointed out as an amenity drawing many expatriates to the neighborhood. Over the past three years, the apartment complex has achieved an average occupancy rate of 93 percent.

“We think this transaction is a good example of the value-added investment opportunities we seek in China,” Ken Ng, managing director and head of Angelo Gordon’s China real estate, added in the statement. Other projects Angelo Gordon has invested in include the Sanlitun Village in Beijing, Bridge Eight Creative Park in Shanghai, the Bo Xuan Yuan in Tianjin, and the Silo City residential development in Dalian.

Last year, Angelo Gordon closed two global real estate funds – AG Realty Fund VIII and AG Core Plus Realty Fund III – on $1.27 billion and $1 billion, respectively. Most recently, the firm also held a $130 million first close on its value-added Net Lease Realty Fund III in May. Since its founding in 1993, Angelo Gordon has acquired $13 billion of properties globally.