Grosvenor makes $254m China fund debut

The London-based real estate investment and fund management firm has bought a Shanghai shopping mall for the Grosvenor Vega China Retail Fund

Grosvenor Fund Management has completed the first investment for it Vega China Retail Fund.

The London-based firm has bought Shanghai shopping centre, The North, in a venture with fund co-sponsor Vega Wharlock Properties. This is the first investment for the fund since it closed on $600 million in late 2008.

The investment in the 86,250 square metre mall, which is expected to open mid-next year, will absorb almost 40 percent of the fund’s equity and is expected to have a gross end value of RMB1.7 billion (€181; million $254 million). It was acquired using debt at a loan-to-value ratio of around 50 percent.

Under terms of the deal, the fund has a 60 percent interest in the asset while the remaining 40 percent ownership is split between two co-investors.

Grosvenor chief executive in Asia, Nicholas Loup, said: “This is in one of the emerging locations in Shanghai with infrastructure already built and lots of residential being built.” He added the centre was aimed at the upper-middle class local population.

Among the tenants signed up on pre-lets are H&M, UNIQLO, C&A, HB Cinemas and Tesco.

Loup added: “We’re in a market where in central locations for a development like this one with good anchors in place, other retailers will follow and want to be here. There aren’t many competing opportunities in Shanghai at the moment.”

Loup said the fund was being lined up to invest in two other deals currently and would ultimately hold between four and five assets. 

Grosvenor’s partner, Vega Wharlock Properties, is a real estate investment firm founded to make investments which compliment the various retail businesses of the Chan family in China, one of the country’s best known retail investors.