Carlyle buys into Chinese shopping malls

The Washington DC-based firm has bought a 49 percent stake two large China shopping malls owned by one of the country’s largest developers.

The Carlyle Group has acquired a 49 percent stake in two In-City Shopping Malls owned by SZITIC Commercial Property, one of mainland China’s largest shopping mall developers and operators. Financial terms of the deal were not revealed.

The two shopping malls include the 1.5 million-square-foot Suzhou In-City Mall, with one basement floor and four aboveground floors; and the 560,000-square-foot Hangzhou Gudun In-City Mall, with two basement levels and four aboveground floors.

Both malls are near the heart of their respective cities, which are close to Shanghai. Both have been in operation for more than three years and house retail tenants ranging from fashion to electronics, including global retailers like Walmart and Starbucks.

Carlyle declined to comment on the deal but, since its founding in 2001, the firm has invested in 14 transactions in China with a total capitalization of $2.5 billion. Carlyle’s Chinese real estate investments are made from its Carlyle Asia Real Estate platform, which has invested more than $2.1 billion of equity in Asian real estate since its inception.

That total is set to grow further as the strategy of Carlyle's incoming Asia opportunity real estate fund is predominantly focused on China. Just this month, the firm launched a third Asia-focused vehicle, targeting $750 million of equity, and hopes to hold a first close this summer, PERE revealed.

In a statement, Jason Lee, managing director and head of Carlyle Asia Real Estate, said the firm’s China strategy was devised to capitalize on the country’s continued urbanization and government desire to improve its domestic consumption. He said these would “continue to benefit China’s retail sector, supporting growth in both rent and capital value for well-operated retail properties like In-City shopping malls operated by SZITIC Commercial Property.”

Liye Ding, chairman and chief executive of SZITIC, said the sale to Carlyle could precipitate further investments between the two firms. “Leveraging Carlyle’s strong retail industry expertise and global network, we will explore more value-added initiatives to boost competitiveness and to meet the changing consumer demands of China,” he said.