CAPITALAND has announced the first closing of the group's first discretionary real estate debt fund, with a target capital raise of US$750 million.
It has raised over 70 per cent of the capital, or US$556 million for the fund's first closing, with subsequent commitments from major institutional investors expected later this year, it said.
The Credo I China fund will invest in offshore US dollar-denominated subordinated instruments for real estate in China's first and second-tier cities, the group said in an exchange filing on Wednesday morning before the market opened.
It added that the fund will focus on loans and securities of "high-quality real estate covering commercial, retail, residential, logistics and industrial properties".
The property developer will hold a 10 per cent stake in the fund, which is set to be one of China's largest real estate debt funds, according to the group.
Lee Chee Koon, CapitaLand's president and group CEO, said the group is delighted with the strong investor participation in the fund, and that its 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," added Mr Lee.
Separately, CapitaLand's president for China and investment management, Lucas Loh, noted that the fund comes at an opportune time as a "significant volume of China's commercial real estate loans are due for refinancing within the next few years, while bank regulatory changes and deleveraging measures have tightened the amount of credit available to borrowers, prompting them to turn to non-bank lenders".
He added that the Credo I China fund will also augment CapitaLand's business in China through investment in real estate debts.
Shares in CapitaLand closed at S$3.50 apiece on Tuesday, down 0.85 per cent, or three Singapore cents.