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.
Write to Esther Fung at esther.fung@dowjones.com
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