New York-based private equity real estate giant the Blackstone Group has made its third real estate investment in China this year with a $128 million capital injection into a high-end residential-led development project site in Ningbo, according to a Hong Kong stock exchange release.
With its capital, which is understood to involve only a small amount of onshore leverage, Blackstone has acquired a 49 percent stake in the project from listed Hong Kong property company Franshion Properties. A Franshion subsidiary, Enhanced Experience, will continue to hold a 51 percent stake and act as the developer of the property. Blackstone’s investment will give the firm two out of five board seats on the board of directors of both Enhanced and the project itself.
Once developed, this property will encompass 1.7 million square feet, and is expected to take between three and four years to complete. Ningbo is considered one of China’s wealthiest tier II cities, and home to many high net worth individuals. The property, while not in the central business district, is located in the city’s core.
At the time of the investment, Franshion had already paid 60 percent of the RMB1.4 billion (€168 million; $231 million) land premium for the project, and expects to pay the remainder by March.
The capital for Blackstone’s investment is understood to have come from its Blackstone Real Estate Partners (BREP) Asia fund. As Blackstone’s first Asia-specific real estate vehicle, BREP Asia has a target of $3.5 billion, and is understood to have already raised $1.8 billion of that. As of last month, the firm had invested 20 percent of the fund’s target capital already.
Blackstone declined to comment further than the release, but PERE understands that the firm hopes to make this deal the first of a long-term relationship with Franshion.
With $248 billion assets under management across all asset classes, and $64 billion in real estate specifically, Blackstone’s previous two China real estate deals were a HK$2.5 billion (€242 million; $322 million) bid to take private Hong Kong-listed Tysan Holdings, and a $400 million investment in shopping mall owner, operator and developer SCP Company.