Grosvenor plans $700m Asia resi club

The London-based real estate investment and fund management firm is preparing a club-style investment vehicle aimed at luxury residential properties in China and Japan.

Grosvenor, the London-based real estate investment and fund management company, is planning an investment club aimed at luxury residential properties in the Asian markets in which it has a presence, namely mainland China and Tokyo.

The firm, which manages £12.2 billion (€14.2 billion; $18.5 billion) of assets, is preparing to offer to a select number of investors The Development Partnership, a six-year investment vehicle the capital of which would be invested in high-end residential schemes in Shanghai, Beijing, Hong Kong and Tokyo. The vehicle is expected to be established sometime in the next three months.

Grosvenor aims to attract at least two investors, institutional or corporate, to commit between $100 million and $150 million of equity each, and the firm would inject an additional $50 million from its balance sheet. Added to the equity that Grosvenor expects the club’s development partners to commit, and the vehicle could represent up to $700 million if filled.

The club is expected to invest in three to five assets branded similarly to Grosvenor’s prior residential developments in China and Japan. To date, the firm has invested in residential developments in locations such as Repulse Bay in Hong Kong and Roppongi in Tokyo. Indeed, residential properties account for about 57 percent of the $1.1 billion of assets that Grosvenor manages in the region and many of these have been acquired via similarly-themed joint ventures.

For this club, investors should expect net IRRs of between 10 percent and 12 percent from assets that are repositioned or redeveloped and 15 percent from fresh developments.