KaiLong Real Estate Investment, the Shanghai-headquartered real estate investment firm, has launched full-blown operations in Europe as its first step towards developing an international real estate presence.
KaiLong declined to comment on the story. However PERE has learnt from sources that the firm opened its first overseas office in London last year and has been working with a London-based operating partner to identify and source properties with a value-add investing strategy.
At present, the firm’s international strategy is focused on raising Chinese capital for small-sized closed-ended private equity real estate funds that would be seeded with commercial assets with refurbishment potential.
It is understood to have already raised a £14 million (€18 million; $20 million) fund that was seeded with an empty London office property, with plans to reposition the asset into a serviced office. After the property is stabilized the firm is targeting IRRs of around 7 to 8 percent.
The firm is also in the process of raising capital for its second fund via which it is targeting to raise around £30 million.
The capital for both vehicles has been raised from Hong Kong and mainland Chinese high-net-worth investors, family offices and trust companies. By setting up a limited liability partnership (LLP) in the Shanghai Free Trade Zone, many investment managers such as KaiLong are providing a channel for domestic investors to deploy capital in offshore markets.
While fundraising for offshore funds would be done out of the firm’s Hong Kong office, KaiLong has been in the process of hiring staff for its London office and is understood to have recently appointment an analyst. The US market is next on its radar. No investments have been made in the US yet but it is believed that the firm is actively seeking opportunities with a similar investing strategy in the country.
KaiLong is among the growing number of Asian firms setting up operations in international markets to expand their offshore property holdings. Last month, the Hong Kong-headquartered real estate investment, development and asset management firm Asia Pacific Land appointed former Cerberus Capital Management’s managing director William Scully to lead its foray into the US market.