Tishman Speyer raises “watershed” RMB fund

The New York-based firm has raised RMB 1.2 billion for a mixed-use development in Suzhou in what it claims to be the first Renminbi denominated real estate fund raised by a foreign developer.

Tishman Speyer has become the first foreign developer to raise a Renminbi denominated real estate fund, it said in an announcement today.

The New York-based developer-cum-fund manager announced it had raised RMB 1.2 billion (€145 million; $190.6 million) solely from Chinese investors for the development of a mixed-use scheme in Suzhou, eastern China.

The fund’s cornerstone investor was Hwabao Trust, a Shanghai-based trust company and subsidiary of Shanghai Baosteel Group Corporation, the Chinese iron and steel conglomerate, according to Bloomberg Businessweek. Noah Holdings, a Shanghai-based wealth management firm also with intentions to raise capital for investing in Chinese real estate, is serving as the fund’s exclusive financial advisor.

The news of a US investment management firm harnessing an RMB denominated vehicle will likely prick the attentions of many rival firms that have long considered domestic capital as rival to their investment programmes in the country owing to its relatively cheaper cost when deployed to US dollar denominated vehicles.

While RMB denominated vehicles are now being raised by private equity platforms in China – The Blackstone Group is one example of a firm to have done so – to date, international real estate platforms had not yet managed to tap this source of capital.

Indeed, in a joint statement, Tishman Speyer’s co-chief executive officers Jerry and Rob Speyer described the raising of a Renminbi denominated real estate fund as a “watershed event in the evolution of China’s capital markets”.

The scheme itself is located in the Suzhou Industrial Park in the city’s central business district on the west bank of the Golden Rooster Lake. When completed, the scheme is expected to comprise two towers, totalling 1.23 million square feet, offering a mix of offices and retail space as well as high end residential.

The Speyers said of the scheme: “The ongoing economic growth in the immediate region and the local infrastructure improvements that are underway make this a very good time to develop superior-quality properties to serve the needs of world-class tenants.  We look forward to adding a landmark to the superb SIP master plan.”

Tishman Speyer’s head of China is senior managing director Ryan Botier, a former chief operating officer of Asia Pacific Real Estate. He established the firm’s Shanghai office in 2006 and leads a platform that controls three developments in China, namely The Springs in Shanghai, another mixed-use development for which the firm broke ground in June 2011; Fifth Avenue in Tianjin, a 19-villa commercial villa scheme that started construction in 2009 and; The Atrium in Chengdu, also a mixed use development which also started construction in 2009.