MSREI to exit RMB3.3bn Lifehub mall in Shanghai

On behalf of its 2004 global opportunity fund, Morgan Stanley Real Estate Fund V International, the real estate unit of investment bank Morgan Stanley has agreed the sale of the LifeHub@Jinqiao shopping centre to a JV between subsidiaries of Singapore-based conglomerate Keppel Group.

Morgan Stanley Real Estate Investing (MSREI) is to exit from a majority stake investment in a big shopping centre in the Pudong business district in Shanghai in a deal valued at approximately RMB3.3 billion (€395 million; $528 million).

MSREI is to sell its 80 percent stake in the
Life Hub @ Jinqiao shopping centre to a joint venture between Keppel Land China and Alpha Investment Partners, subsidiaries of developer Keppel Land, the property arm of Singapore based conglomerate Keppel Group.

The sale by real estate unit of Wall Street heavyweight investment bank Morgan Stanley of entities that own the stake is expected to reflect a yield of 5.2 percent based on the centre’s projected net operating income for 2013.

MSREI is selling on behalf of its fifth global opportunity fund, Morgan Stanley Real Estate Fund V International, according to a previous report by The Wall Street Journal.

The newspaper quoted one source who said that should the centre sell for at or near its indicative pricing of RMB3 billion to RMB560 million then MSREF V would make a 2.5x equity return on its investment.

MSREF V attracted $4.2 billion of equity in 2004 and a further $297 million for co-investments in 2006, according to PEREConnect, PERE’s data provider.

Life Hub @ Jinqiao comprises 1.06 million square feet of retail space and 173,000 square feet of offices. It is leased to tenants including McDonald’s and UNIQLO.

It was developed by Hong Kong-based developer The Chongbang Group, which holds the remaining 20 percent stake.

MSREI was unable to comment at press time. The firm was advised on the sale by Jones Lang LaSalle.

For its part, Keppel said in an announcement on the investment it marked the first time its subsidiaries Keppel Land China and Alpha Investment Partners had collaborated to acquire a premium property in Shanghai.

Ang Wee Gee, chief executive officer of Keppel Land, said: “As one of China's key gateway cities, we remain confident about the opportunities in the commercial property market in Shanghai. Leveraging the synergistic business models of Keppel Land China and Alpha, we believe that the latest acquisition of the mixed-use development, Lifehub, will see us benefit from Shanghai's growth into one of China's largest retail markets.”