Chinese Commercial Property Target of New Mutual Fund

Mapletree Investments to launch venture in next 1-2 years

Mapletree Investments of Singapore said Wednesday that it planned to launch a new mutual fund targeted toward commercial property in China, according to a senior executive. Inception is planned within the next 1-2 years, with investments to total between $500 million-$1 billion in Singapore dollars ($401 million-$801 million).

Reuters reported that Chua Tiow Chye, group chief investment officer for Mapletree, said at a press conference that the fund will be backed by both internal and outside investor funds. The new China-focused fund will have between S$500 million and S$1 billion to invest in Chinese commercial property once it deploys most of the money in its existing funds, he added.

Chua said in the report, "The new China fund will be purely commercial-related so investors are quite clear what they are co-investing with us. Looking at our pipeline, for us to deploy S$500 million worth of equity over a period of 2-3 years should not be an issue."

Mapletree, which is owned by state investor Temasek, manages property funds, several of which are listed on the Singapore exchange. It made S$747 million net profit in the fiscal year ending in March, which is 90% higher than its 2009-2010 net profit of S$394 million. As of March 31, it owns or manages S$15.4 billion in assets, according to its annual report.

Chua said the new China-focused fund would target returns in the range of 18-22% annually, which is similar to Mapletree's goals for its existing S$1.2 billion China and India fund. The company plans investments in commercial assets in office, retail and some mixed-residential sectors in China's first and second-tier cities. Chua added, "Because of all the anti-speculative measures which the government has put in place, there's quite a fair bit of interest by even local developers to look at commercial properties."

Based on its experience in managing malls and offices in the region, Mapletree expects to do better than its competition. Earlier in the year it raised S$898 million for its IPO of Mapletree Commercial; that fund's chief asset is Singapore's largest shopping mall, Vivocity.

Mapletree also plans to launch a Vietnam fund in 2013.

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