EXCLUSIVE: Century Bridge closes first capital for sequel China fund

Against widening concerns about the future of Chinese markets and the country’s economy, the Beijing and Dallas-based private equity real estate firm has corralled the first equity for its second China development property fund.

Beijing and Dallas-based private equity real estate firm, Century Bridge Capital, has raised the first money for its second China development-focused property fund.

According to filings posted with the Securities & Exchange Commission, the firm has raised $59.66 million for its Century Bridge China Real Estate Fund II.

The firm declined to comment.

Century Bridge is targeting a $400 million capital raising for the fund in total.

If successful, the firm will have raised more than twice the amount of equity it raised for its 2012 debut vehicle, Century Bridge China Real Estate Fund, which attracted $170 million from 10 investors.

A $25 million equity investment in a joint venture in a residential project in Dalian in January saw that fund become totally deployed. Other investments were made via other joint ventures in the cities of Wuhan, Hangzhou, Wuxi and Zhongshan.

Century Bridge’s capital raising is a sign that, despite widespread institutional concern about China’s faltering markets and economy, certain investors do believe now is a time to look at the country’s property market as something of a contrarian play.

Property brokers have been making bearish noises about the immediate prospects for Chinese real estate. In a note released late last month, global property services giant CBRE said that with the country’s latest interest rate cut, the mortgage rate has come down to a historic level, which should help in a recovery in the housing market. However, it cautioned that the support from lower mortgage rates would be curtailed if economic growth turns out to be worse than expected.

The firm said the retail sector in particular was expected to be adversely impacted by the stock market volatility and a slower GDP growth, given that the sector is already facing a supply glut and competition from e-commerce.

Real estate investors were also likely to remain cautious and take a longer time to complete deals. According to CBRE, that could lead to an increase in the cap rates in some of the lower-tier cities and the retail sector.