Gaw Capital, Country Garden launch $1b China distressed asset fund

Photo: Gaw Capital Partners

Hong Kong-based real estate private equity firm Gaw Capital Partners is investing in distressed real estate projects in China with Shenzhen Paladin Asset Management, the investment arm of Chinese property developer Country Garden Group.

In a statement on WeChat, the two companies have confirmed the setting up of a new $1-billion special situations fund that will invest in distressed property projects. A Gaw Capital official also confirmed the development to China Money Network.

The partnership makes Gaw Capital the latest player to enter the country’s distressed debt and distressed asset spaces, following the moves of foreign investors Bain Capital, Blackstone Group, and Oaktree Capital Management.

A Reuters report early this year said Blackstone and Bain Capital made their first investments in the space in China in recent months while Oaktree agreed to buy a portfolio of distressed loans with a face value of Rmb3.1 billion ($477 million).

More global distressed-debt specialists are moving into China as the government becomes serious about tackling the country’s $256 billion of official non-performing loans, according to reports.

The establishment of the $1-billion fund by Gaw and Country Garden Group reflects the increasing maturity of the Chinese distressed real estate market, a distressed debt investor told CMN.

Gaw Capital specialises in adding strategic value to under-utilized real estate assets through redesign and repositioning. The private equity firm says it has raised equity of $9.6 billion since 2005 and commands assets of $14 billion under management as of Q4 2017.

With its in-house asset management operating platforms in retail, hospitality, property development and logistics, the PE firm currently focuses on real estate markets in Greater China and other high barrier-to-entry markets globally.

In October 2017, Gaw paid $323 million to acquire the Standard Hotel in Manhattan. The acquisition price was $77 million lower than the 2014 reported selling price of the hotel.

Last month, Gaw Capital acquired two towers of the four office blocks in Shanghai’s iconic SKY SOHO through a fund under its management and in partnership with a consortium including Allianz Real Estate.

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