Ascent Real Estate Investors, the newly-created China-focused business established by a spun-out team from The Carlyle Group, has inked its debut transaction.
The Shanghai-based firm was formed after the Washington, DC-based private equity firm decided to close its dedicated Asia property business late last year.
Ascent has assembled a consortium of investors to agree to acquire a mixed-use complex in Beijing using approximately $610 million in equity. Including leverage, the total purchase price of the off-market transaction was around $1.2 billion, two people familiar with the transaction confirmed to PERE. The sale and purchase agreement for the deal has been signed and a final closing is slated to be held later this month.
PERE understands that the Zug-based private markets firm Partners Group is the majority equity investor in the consortium. It has invested alongside three other organizations, including SDP Investments. In addition to the equity committed by the four investors, Ascent Real Estate Investors has invested 2 percent as the manager stake.
The Grade A office and retail complex located in No.3 Haidian Street in Beijing’s Zhongguancun area, a hub for technology companies, has a total gross floor area of 1,905,212 square feet.
Ascent Real Estate Investors is comprised of seven ex-Carlyle investment professionals, led by veteran Han Chen who was a managing director responsible for Carlyle’s China real estate operations. Alongside pursuing co-investment opportunities on a deal-by-deal basis, the firm is also currently managing the final remnants of Carlyle’s China property portfolio. This includes a $700 million logistics venture – Carlyle’s second logistics-focused platform in China – which has made investments in development projects across Tier 1 Chinese cities.
In addition, the winddown of investments made from a core-plus separate account mandate with the National Pension Service of Korea is ongoing, which PERE has reported on earlier. The last remaining office asset is left to be exited from this mandate.
These remaining investments account for approximately $470 million in total equity, one person told PERE.
Carlyle started investing in China in 2004. As of December 2018, the firm was understood to have made around 40 real estate investments, managing approximately $1.4 billion in equity investments, since inception. PERE understands 32 of these investments had been realized as of December 2018.
Carlyle’s China team parted ways after the firm decided to close its dedicated Asia real estate business and instead pursue all future real estate investments through the Asia buyouts business, as PERE reported last November. As things stand, Ascent Real Estate Investors and Carlyle Group are sharing promote and carried interest payments on existing investments. As PERE’s source explained, Ascent’s team is also still working out of Carlyle’s office and continues to follow the private equity firm’s compliance policies and reporting procedures.