HSBC strikes $280 China JV

The global bank has signed up to buy three retail malls in China with British supermarket chain Tesco and Singapore-listed Metro Holdings.

HSBC Specialist Investments (HSIL) has bought three retail malls in China for around $280 million in a joint venture with Tesco, the British supermarket group, and Singapore listed Metro Holdings Limited.

HSIL, which is due to spin out from its parent bank later this month, has made the acquisition on behalf of the HSBC NF China Real Estate Fund.

The three malls total 2.4 million square feet of space in the cities of Fuzhou and Xiamen in the southern Chinese province of Fujian and Shenyang in the north-east province of Liaoning, it said.

All of the malls are currently under development and are anchored by a Tesco hypermarket. The remaining space is to be let to a mix of international, national and regional brands, said HSBC.

It is the second joint-venture investment between the fund, Metro and Tesco, the first being for two mixed-use developments and one mall development in north-east China that closed in December 2009. All three malls of the first joint-venture investment opened in 2010.

Stuart Jackson, head of real estate at HSIL said the investment said of the latest acquisitions they provided investors with exposure to domestic retail consumption, which was expanding rapidly.

The fund has sold the fund’s first two asset sales recently and made two partial exits of pre-IPO investments, returning proceeds of $268 million to the fund.

Stephen Yuen, chief executive officer of the fund, said the initial focus on institutional-grade assets in Tier 1 Chinese cities had ensured significant buyer interest, and enabled the fund to make exits at “very attractive sale prices”.