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CapitaLand announces launch of US$750 mil discretionary real estate debt fund in China

SINGAPORE (Feb 27): CapitaLand has announced the first closing of its first discretionary real estate debt fund, which the group will hold a 10% stake in.

Dubbed “CREDO | China”, the fund has a target capital raise of US$750 million ($1 billion), and will invest in offshore USD-denominated subordinated instruments for real estate in China’s first- and second-tier cities.

The group has raised over 70% of the capital or US$556 million for the first closing, and expects subsequent commitments from major institutional investors later this year.

It will focus on real estate loans and securities covering commercial, retail, residential, logistics and industrial properties.

In a press release on Tuesday, CapitaLand says it expects CREDO | China to be one of China’s largest real estate debt funds at a time when a significant volume of China’s commercial real estate loans are due for refinancing, as well as amid a tightening credit environment.

Citing Bloomberg data, the group notes that US$70billion of China commercial real estate loans are due to expire and will likely require refinancing within the next five years.

“We will tap on CapitaLand’s operating capabilities and network in China to source for investment in quality property debt instruments for this debt fund. The fund will also augment CapitaLand’s business in China through investment in real estate debts,” says Lucas Loh, the group’s president for China & Investment Management.

“Fund management business is an integral part of CapitaLand’s strategy. CREDO I China will broaden CapitaLand’s fund offerings to real estate debts, going beyond our existing 15 private equity funds, which focus primarily on direct investment in property projects,” adds Lee Chee Koon, CapitaLand’s president and group CEO.

Shares in the group closed 3 cents lower at $3.50 on Tuesday.

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