Beijing-based private equity real estate firm Century Bridge Capital has formed a $100 million joint venture with Zhejiang Headway Real Estate for the development of a middle-income, residential project in Hangzhou, China, the second deal out of its maiden fund, according to a firm statement.
Century Bridge has invested $32.8 million in the joint venture, bringing its $170 million Century Bridge China Real Estate Fund to 40 percent invested. Since this is a development project, the joint venture will only involve about 15 percent to 20 percent leverage.
The project will comprise about 3.5 million square feet, including a large retail portion that will begin construction slightly later, according to Thomas Delatour, Century Bridge’s chief executive. It is located in a suburb of Hangzhou and sits on a new subway line that connects directly to the city’s central business district.
“This project is perfectly typical of what we look for in an investment,” Delatour told PERE.
The residential portion of the project is expected to take two to two-and-a-half years to complete, and Delatour said Century Bridge is expecting to exit from its investment around that time. Further, he said that once most of the residential units are sold, Zhejiang Headway might buy Century Bridge out.
Co-founded in 2006 by Delatour, Century Bridge closed its fund on $170 million in September, less than half of the $400 million amount it originally targeted. The vehicle was backed with commitments from the Church Pension Fund, Metropolitan Real Estate Equity Management, Merseyside Pension Fund, Quilvest and Deutsche Finance Group.
In July, the firm made its first investment for the fund with a $44.4 million investment in a Wuhan project. The pipeline of the fund is such that Delatour expects most of its remaining $100 million to be invested by the beginning of next year. If that happens, the firm might start fundraising as early as then for a second vehicle, he indicated.