Hong Kong-based China Everbright invests in real estate through its subsidiary, EBA Investments. In February, that platform bought Dallas-based investment manager, Arrow Real Estate Holdings. The new entity, EB Arrow, has a 15-property portfolio of retail and mixed-use projects. With the Capview purchase, EB Arrow gains Capview’s 115 single tenant net lease assets.
Terms of the deal were not disclosed, and China Everbright could not be reached for comment.
Chinese capital controls have significantly dampened interest in US real estate, with Chinese investment in the country dropping from a high of $16.6 billion in 2016 to $6 billion last year, according to data provider Real Capital Analytics.
One other Chinese investor, CITIC Group, has also expanded in the US via manager purchases. CITIC started investing in US real estate in 2016 through a joint venture with San Francisco-based Stockbridge Capital Group then, last year, bought a 48 percent stake in the investment manager, PERE previously reported.
Before the deal, Capview was in the process of converting its flagship fund, Capview Income and Value Fund IV, which closed on $126 million in 2017, to an open-ended vehicle. The new fund, EverSTAR Income & Value Fund, will allow investors to have more liquidity options, Hammill said.
Capview’s limited partners approved both the conversion and the ownership change, and EB Arrow is understood to have committed capital to the fund.
Better asset management
When Capview founder John Hammill was looking to bring in another equity partner last year, he consulted with Arrow founder Todd Minnis, whom he has known for over two decades.
“He wanted to be in the single-tenant business, and I wanted better asset management,” Hammill said. “Over the years, I had spoken with other groups about selling stakes, but our relationship was so good – this is such a natural fit. We started to realize that two could accomplish more than twice as much as one.”
Under the new ownership, Hammill plans to increase the firm’s assets from $350 million currently to $500 million next year, then to $1 billion in three years and $2 billion in five years.
“This leapfrogs our objectives by five to seven years,” he said. “For our business strategy, the more diversified we are, the safer for our investors.”
He also plans to expand Capview’s products over time to broaden types of investments in the space, including short-term lease strategies and single tenant build-to-suits.
The deal, which closed at the end of May, brought EB Arrow’s holdings to $1.9 billion in assets.