Morgan Stanley (NYSE:MS)
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5 Years : From May 2011 to May 2016
By Esther Fung
SHANGHAI--A Morgan Stanley-managed (MS) real-estate fund is close to selling a Shanghai shopping-and-office complex that could fetch 3 billion-3.5 billion yuan ($480million-$560 million), people with knowledge of the matter said Thursday.
The likely buyer for Life Hub @ Jinqiao is an Asian property fund, the people said without elaborating. It is 80% owned by Morgan Stanley and rest by joint developer, Hong Kong based Chongbang Group.
If sold at or near its indicative pricing, MSREF V could make a profit of two-and-a-half times outlay, one of the people said. Real-estate asset investment deals in China have been flat this year and some have failed to sell. The MSREF V International fund put Life Hub up for sale mid this year.
The land cost MSREF V CNY640 million in 2006.
Life Hub, opened late 2009, includes 11 buildings, 1,200 parking spaces and landscape features. It has a total gross-floor area of 1.94 million square feet. The mall occupies 1.055 million square feet and offices another 172,000 square feet.
Tenants include McDonald's, Xiaonanguo Restaurant and clothing retailer Uniqlo. It won an award for excellence from U.S.-based, nonprofit researcher Urban Land Institute.
However, the site is shaped "like a cat with a long tail" and was challenging to develop, an investor who has studied the site said.
"But Morgan Stanley managed to find a good partner and it has been managed quite well," he added. "It has a good tenant mix, and I'd say this project is one of Morgan Stanley's more successful ones in Shanghai in recent years."
"This isn't a signal that Morgan Stanley is exiting China," said another of the people, adding that the investment bank's China real-estate portfolio is valued now at more than $2 billion. It has made acquisitions in recent years.
Morgan Stanley bet big and early on Shanghai real estate, moving into the market in the early 2000s and helping to draw world-wide investment to the city. Industry players added that investment banks now prefer to keep a low profile in the politically sensitive sector. In addition, there has been a personnel shake-up at Morgan Stanley's real estate arm in China in recent years.
MSREF V International fund was established in 2006 with $4.2 billion of equity commitments and has acquired assets in Asia-Pacific and Europe.
Jones Lang LaSalle is marketing the sale.
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