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CapitaLand and QIA launch $600m residential fund

The joint venture vehicle is slated to be the start of a grand roll-out of funds by CapitaLand that could ultimately comprise approximately S$8 billion (€5.3 billion; $5.9 billion) to S$10 billion of assets by 2020.  

CapitaLand, the Singapore-headquartered real estate firm, has established a joint venture partnership with the Middle Eastern sovereign fund, Qatar Investment Authority, to launch a $600 million residential real estate fund. The firm has formed the 50:50 partnership via Ascott, its wholly owned unit that owns and operates serviced apartments globally.

The partnership is the first among many such ventures CapitaLand plans to undertake as it expands its fund management business. In a presentation made earlier in the day, the firm revealed plans of launching six new private equity funds with total assets valued at approximately S$8 billion (€5.3 billion; $5.9 billion) to S$10 billion by 2020.

The Ascott Serviced Residence (Global) Fund, Ascott’s largest private equity real estate fund to date, will be a closed-ended fund with a strategy to deploy capital in value-add investments in the serviced residences or rental housing sector. Qatar Investment Authority and Ascott each have agreed to contribute $300 million in equity for the fund. The capital will be drawn down progressively from both the firms on an equal basis. The fund will have a 10-year term with an investment period of three years.

“Real estate is a capital intensive business and fund management is central to the active capital management strategy of CapitaLand as a dominant real estate player,” said Lim Ming Yan, president and group chief executive officer of CapitaLand. “This tie-up with QIA is a good example of how we are proactively working with strong capital partners to build up a scale…”

The initial focus would be to deploy the capital in Asia Pacific and Europe, and invest in “development, redevelopment and turnkey opportunities, as well as acquire stable projects for asset enhancement, repositioning or conversion into serviced residences and rental housing properties, “ according to a company statement.

Lee Chee Koon, chief executive officer of Ascott further, added: “As Ascott steps up on investments to expand our presence globally, this serviced residence fund will provide the financial backing to support our acquisitions and accelerate Ascott’s growth to achieve our target of 80,000 apartment units globally by 2020. We will also be able to increase our fee-based income as Ascott has the first right to manage the properties that the fund acquires. We look forward to the many attractive opportunities ahead to put this capital to good work as we build a long-term partnership with QIA.”

Ascott currently also manages a $500 million China serviced residences fund. The capital raised via the fund was fully deployed in 2011, of which 60 percent has so far been divested. Its parent company CapitaLand currently manages 17 real estate private equity funds and five real estate investment trusts (REITs) with assets under management of more than S$43 billion.