EXCLUSIVE:KaiLong China fund oversubscribed at $238m

KaiLong Real Estate Investment, the Shanghai-headquartered real estate investment firm, has reached a final close on its maiden US-dollar denominated real estate fund, surpassing its original fundraising target by $38 million.

PERE understands that the firm has hauled $238 million in equity commitments for the KaiLong Greater China Real Estate Fund, which was launched in 2013 with a $200 million target and a hard cap of $300 million. The capital has been raised from around 10 investors, which include fund of funds, European family offices and Asian family offices.

The closed-ended fund was launched with an objective of making investments in value-add opportunities in industrial parks, office and retail properties in China and Hong Kong. The targeted gross IRR from the fund is around 18 percent to 20 percent. So far, close to $100 million has been deployed in three investments – the firm is understood to be in the process of formalizing the third investment in a commercial property in China.

The two investments made earlier this year saw the firm purchase a commercial office building in the Zhangjiang Hi-Tech Park, which is now part of the Shanghai Free Trade Zone, as well as a non-operating hotel building in Shanghai called Project Laura, and has plans to convert it into an office building with some retail outlets. The firm invested around $80 million in these two Shanghai properties. 

According to news reports, the firm is also planning to list its portfolio of business parks in China, which are believed to be valued at more than $700 million, as a real estate investment trust (REIT) in Singapore. KaiLong declined to confirm the plans.

Launched in 2004, KaiLong has invested in 23 projects with a total investment of over RMB8.2 billion (€1.15 billion; $1.3 billion). Its current assets under management now total $500 million. So far, it has raised four RMB real estate private equity funds, totalling RMB 1.5 billion in size.