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Perennial-led consortium rolls out US$1.2b JV to expand in China
SINGAPORE-LISTED Perennial Real Estate Holdings is making major inroads into China via a US$1.2 billion joint venture to acquire and develop healthcare integrated mixed-use developments connected to China's high-speed railway (HSR) stations.
In the first closing of funds, Perennial HC Holdings, the JV vehicle, secured US$500 million, the integrated real estate and healthcare group said on Wednesday, adding that the move is in line with its expansion strategy.
Pua Seck Guan, chief executive of Perennial, said: "Perennial currently has two existing HSR projects in Chengdu and Xi'an.
"With the establishment of this US$1.2 billion JV vehicle, we are excited about the potential to grow our HSR portfolio to up to eight projects with a total gross floor area (GFA) of over four million sq m, positioning Perennial as a leading player with the largest HSR portfolio."
Through its subsidiary, Perennial would hold a 45 per cent stake in its first JV vehicle, to which it contributed US$225 million in the first closing. This is to be funded in stages upon capital call through internal cash and /or bank borrowings.
The remaining stakes are held by a Perennial-syndicated consortium of partners:
- A subsidiary of Hong Kong-listed Shun Tak Holdings owns a 30 per cent stake;
- Bangkok Bank Public Company holds 10 per cent;
- A Singapore-listed BreadTalk Group's unit owns five per cent;
- An investment vehicle of Kuok Khoon Hong, one of Perennial's core sponsors and Perennial's chairman, and S1F Pte Ltd each has a four per cent stake; and
- Wilmar International's subsidiary, with a two per cent share.
The JV will target HSR healthcare integrated mixed-use developments opportunities in Tier 1 or strong Tier 2 cities and provincial capitals in China which are near transportation hubs, particularly HSR stations.
Perennial said: "Positioned as one-stop regional healthcare hubs, the HSR healthcare integrated mixed-use developments, typically measuring between 300,000 and 800,000 sq m in total GFA, are expected to host health-care real estate featuring core medical/health-care facilities, including various types of specialised hospitals, such as international general hospital, international women's and children's hospital, international geriatric hospital and international rehabilitation hospital, as well as medical centres, elder-care homes and nursing homes."
There will also be complementary medical and health-care related services, including diagnostic centres and pharmacies.
The developments are expected to comprise other real-estate components such as hotels, retail, serviced apartments and offices, and will support various communities, including residents of the city and beyond.
In line with the deal, Perennial and Shun Tak will set-up an asset and project management company and a hotel management company to manage the asset, project and hotel-management aspects of the HSR healthcare integrated mixed-use developments. Perennial's wholly-owned subsidiary will be the property manager of the mixed-use developments.
The group said the JV would enable Perennial to cater to the growing demand for quality medical and healthcare-related services arising from China's population, which is fast ageing and growing in affluence.
Having the developments near HSR stations would support China's Belt and Road initiative and the growth of medical tourism in China.
Another reason cited for the move is that the JV provides an "asset-light" platform for Perennial to scale its business with the expertise of the consortium partners.
Mr Pua said: "Our HSR health-care integrated mixed-use developments strategy has been a game changer for Perennial, with the sustainable business model receiving strong endorsements from the local authorities, investors, and operators...
"The JV also marks our first foray into the hospitality business, with the hotel management partnership with Shun Tak, which has a strong track record in property development and asset management, particularly in the hospitality industry. The potential portfolio of HSR projects is expected to create a sizeable hotel portfolio."
Shares of Perennial on Wednesday closed unchanged at S$0.88; Breadtalk's counter ended unchanged at S$1.68 and Wilmar's added two cents to S$3.16.