Funds launch Chinese foray

Funds launch Chinese foray

* Florence Chong
* April 26, 2007

CHINA has become a key focus for both the giant industrial property fund Macquarie Goodman and the part Macquarie Bank-owned MMP REIT, which this week made its first foray into that country.
Macquarie Goodman is poised to launch a China fund, in addition to its fast-growing Asian wholesale fund, based in Hong Kong.

"We are looking at a China fund," Macquarie Goodman chief executive officer Greg Goodman said yesterday.

Mr Goodman said its competitors Prologis and AMB, both based in the US, were already active in China.

Mr Goodman told The Australian that the group would focus on China over the next 12 to 18 months.

Macquarie Goodman has Chinese assets under development and is in due diligence worth $US400 million ($480 million) to $US500 million.

Last year the industrial trust launched its Asian wholesale fund, which owns Hong Kong properties, and the fund has grown to around $1billion.

Mr Goodman said Macquarie Goodman, one of the largest owners of industrial property in Hong Kong, was doing due diligence on a number of buildings in Hong Kong.

"We plan to grow the trust to around $2 billion in the next 12 to 18 months," he said.

This week Hong Kong newspapers reported that Macquarie Goodman was looking at three buildings for $HK1.6 billion ($246 million).

The reports said Macquarie Goodman was looking at the Pakpolee Commercial Centre at Mongkok, Silver Fortune Plaza in Hong Kong's Central and Tins Plaza at Tuen Mun.

The Standard said that in late 2005 Macquarie Goodman unsuccessfully offered to buy Tins Plaza for $HK400 million.

Mr Goodman declined to confirm whether the trust was negotiating on these buildings, except to say that it had "different buildings under different stages of due diligence" in Hong Kong. He said the buildings under due diligence were all industrial properties and not retail.

Macquarie Bank no longer owns a stake in Macquarie Goodman, though the two remain joint-venture partners.

In a separate deal, the Singapore listed MMP REIT acquired a 50 per cent stake in a shopping centre in Chengdu in the Sichuan Province for 150 million renminbi ($23 million).

MMP REIT, previously known as Prime REIT, listed in 2005 and now has assets of about $S1.75 billion ($1.4 billion).

The deal would give the trust the first right of refusal to buy a pipeline of shopping centres in China.

Macquarie Pacific Star chief executive Franklin Heng said the transaction marked the beginning of an important and strategic relationship with the Renhe Spring Group. He said he would be looking for assets in Shanghai, Beijing and the top second-tier cities.

But he expected to work with different partners and strategies in each Chinese city because each had to be treated as a separate market.

The trust targets retail assets, but could look at developments and offices.

The Chinese deal was the second cross-border purchase for MMP REIT, which recently paid $S185 million for seven shopping centres in Tokyo.

The portfolio included six shopping centres in prime retail suburbs from Fusion Creation, and the seventh property, still under development, from FLEG International.

Mr Heng said his immediate focus in the next six months was to establish in Singapore, China, Japan and Malaysia.