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InfraRed poised to return all capital in maiden China fund

The Asia- and Europe-focused firm is expected to return almost all of the capital in its first Asia fund with the sale of two mega-assets in Guangzhou and Beijing.

London-headquartered private real estate and infrastructure firm InfraRed Capital Partners and its Hong Kong joint venture partner Nan Fung Group are understood to be in the final stages of inking two large exits from their InfraRed NF China Real Estate Fund I totalling RMB5 billion (€602 million; $824 million), PERE can reveal.

InfraRed and Nan Fung declined to comment on the story, but it is believed that the firm is expected to generate composite returns of approximately 2x money on their investments.

It is understood that when these exits are closed, InfraRed would have returned to investors almost all of the capital in its $710 million joint venture vehicle with Nan Fung. These disposals would represent the fifth and sixth exits out of the 12 investments for the fund overall since it closed in 2007, which comprise four en-bloc exits of commercial projects, in addition to two mezzanine deals partially realized.

The Guangzhou asset, La Vendome Pazhou, is a 732,000-square-foot mixed-used development that is now 66 percent occupied. The buyer is unnamed, but it is understood to be buying the building from the fund for an asset value of between RMB2.6 billion and RMB2.7 billion. La Vendome Pazhou was completed in the third quarter of 2012.

The Beijing asset, ECMall, is a 760,000-square-foot mall in Beijing. InfraRed instructed DTZ in November to sell the asset, and the firm is understood to be in the final stages of due diligence with an Asian pension fund. Although no details on the transaction have been disclosed, the valuation of the asset is thought to be approximately RMB2.4 billion.

InfraRed is also understood to be fundraising for its InfraRed NF China Real Estate Fund II, for which it is targeting $500 million of equity overall. In June, PERE reported that the firm had raised $200 million in two closings, and the firm is understood to be targeting a final close by mid-year. The firm is also thought to be in the midst of completing the first three deals for Fund II, valued at $150 million of equity combined.