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Lend Lease plans to launch $500m China fund

The Sydney-based developer and fund manager is planning to invest in suburban malls in China's top tier cities through the vehicle, which could be launched in Q1 2010.

Lend Lease is planning to raise as much as $500 million for its fourth real estate fund in Asia as it seeks to invest in China’s suburban mall sector.

The fund would be the first significant venture for Lend Lease outside of Singapore where it currently runs two funds, although the firm has also invested in a scheme in Malaysia.

Lend Lease chief executive for Asia, Ooi Eng Peng told PERE on a recent trip to Singapore, that the vehicle would be used to partner development firms across China’s top tier cities, including Beijing and Shanghai.

Once fully invested, the fund could be converted into a holding vehicle for investors which would prefer to stay invested in its income producing assets. Investors such as fund of funds, which need to realise a scheduled final return, would at this stage, be offered an exit channel.

Eng Peng said: “it is something that our investors with mandates for China want. We have done our homework in sounding them out and we want to be one of the managers to bring them China retail.”

He added: “We are likely to look at first tier cities first then second tier but not third. We think for Lend Lease to be in China for the first time it would be easier from a value, transparency, demographic point view.”

He said: “The vehicle would be structured similar to (our funds in) Singapore. (They will include a) 5-7 year development phase then a mechanism to convert into a hold-long term fund.”

Read more about Lend Leases strategy behind the fund in this month’s issue of PERE.