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Gaw makes 15% on $589m Guangzhou exit

Gaw Capital Partners and Morgan Stanley Real Estate Investing have fully exited from their investment in the Metropolitan Plaza shopping mall.

Gaw Capital Partners and Morgan Stanley Real Estate Investing have sold the Metropolitan Plaza shopping mall in Guangzhou for just north of RMB 4 billion ($579 million; €547 million) to Asia’s largest real estate investment trust, Link REIT.

The exit represents an approximate 15 percent internal rate of return and around 1.6x multiple for Hong Kong-based private equity real estate firm Gaw Capital, which purchased the property alongside an unnamed co-investor and the investment bank-sponsored platform for around $420 million in 2013, PERE has learned.

The consortium acquired the property, developed by Hong Kong developer Cheung Kong Property and Hutchison Whampoa Property, with Gaw Capital and a co-investor taking a 59 percent stake and MSREI with the remaining.

For its part, Gaw Capital used capital from its Gateway Real Estate Fund III, a 2010-vintage opportunistic fund which garnered $420 million in commitments, to fund the deal.

The property has a total gross floor area of more than 955,000 square feet including shopping facilities from basement level one to the third floor. As at February 28, 2017, its retail occupancy stood at 94.1 percent with 219 tenancies including major international brands such as Decathlon, Nike, H&M, UNIQLO and Starbucks Coffee.

George Hongchoy, chief executive of Link Asset Management, said in an announcement on the deal: “Guangzhou ranks among the top three cities in China in GDP and GDP per capita and yet has the lowest retail property supply among Tier 1 cities.”

“The city offers great business potential and Metropolitan Plaza – 8 Huangsha Road is especially attractive as it is located at Liwan District where no new large-scale retail supply is foreseeable up to 2021.”