Fund platforms give developers flexibility

SINGAPORE property developers are building up fund platforms adjacent to their primary development business - though not in the traditional way that private equity firms do.

Different developers have different motivations for diversifying into fund management. They adopt different strategies for their fund platforms, and use them to meet company-specific agenda.

This is unlike the typical real estate private equity fund that simply pools money from investors to buy properties, enhances the assets over time through redevelopment or repositioning, and sells them before distributing capital back to investors.

The most clear-cut example would be City Developments, which last month announced that it will offload its Nouvel 18 luxury condominium through a creative structure called a profit participation securities (PPS) platform to a group of high net worth Singaporeans. Its intent is quite clear: to avoid penalties of about S$38 million for its unsold uni…