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Trophy Property Development asset swap completes

After agreeing to comprehensively restructure Winnington Capital’s troubled China-focused property development fund last September, the swap of its minority stakes in five developments for a majority stake in one of them has finally concluded.

The asset swap at the heart of the restructuring of the troubled Chinese property development fund, Trophy Property Development (TPD), has completed, according to the firm that manages it.

Venator Real Estate Capital Partners, a private equity real estate firm formed from a spin-out from Hong Kong hedge fund manager Winnington Capital to manage the vehicle, announced the swap happened last Friday.

It sees minority interests in five residential-led real estate developments in Shanghai, Wuhan and Chongqing, swapped for the majority ownership of one of the developments, called Taipingqiao (TPQ) 116, in the upmarket Xintiandi district of Shanghai.

The development, by Hong Kong-listed property company Shui On Land, is the fourth phase of its Taipingqiao master-planned development. The 271,468 square feet site is expected to produce approximately 300 residential units, 330 parking spaces and a clubhouse.

Venator’s president, Philip Mintz, said: “Completion of the asset swap represents a significant milestone for TPD in its efforts to recover as much value as possible for limited partners. TPQ 116 is a high-end residential project in a prime area of Shanghai and, through the joint venture with Shui On Land, the fund has an excellent partner with a proven track record of delivering precisely this kind of development.”

PERE revealed the news of the fund’s restructure and the spin out by Venator last September. It followed a fall out between the fund’s previous manager, Winnington Capital, its 145-strong investor pool and Shui On Land over spiralling costs and lengthy delays.

More than $1 billion of equity was originally raised in 2008 by Winnington for its investments in the five developments. The value of that equity investment was written down to approximately $450 million after the fund’s issues took hold.

Despite the write-down, 12 percent of the investors chose to exit from their positions after the restructure, selling to Zug-based private markets investor, Partners Group, at a discounted value. Nonetheless, many investors have chosen to stay invested in the hope the value of their equity will increase as Taipingqiao 116 progresses. Venator said in its announcement that the main contractor for the site has now been appointed and basement and substructure work will commence imminently.

Marketing for the project, the firm said, will start next year.