CIC bets on US real estate
China wealth fund invests in commercial property lender TPG RE Finance Trust
WASHINGTON: China Investment Corp (CIC), the sovereign wealth fund that controls US$814bil in assets, is betting on US real estate by investing in a commercial real estate lender formed by the money management firm TPG.
In conjunction with last week’s initial public offering of TPG RE Finance Trust Inc, CIC disclosed in a US regulatory filing that it holds about a 15.5% stake in the lender through affiliate Flourish Investment Corp.
CIC, which ranks as one of the world’s largest state-owned investment firms, is boosting its holdings in alternative assets such as private equity and real estate.
The wealth fund accelerated that initiative last month with a US$13.8bil deal to acquire Logicor, a European logistics property company that owns warehouses in countries such as France and Germany, from Blackstone Group LP.
The Beijing-based fund, whose overseas investments returned 6.2% last year, has more than a third of its portfolio in alternative assets, according to its latest annual report. A CIC spokeswoman couldn’t be reached for comment.
TPG, founded in 1992 by David Bonderman and Jim Coulter as a private equity firm, has branched into other asset classes, including credit, real estate, hedge funds, and financing for early-stage companies. The firm oversees about US$73bil, according to its website.
TPG RE, based in New York, originates and acquires mortgages for commercial properties including offices, hotels and apartment buildings. As of March 31, the real estate investment trust held 54 first mortgage loans with a total unpaid balance of US$2.6bil, as well as mezzanine loans and mortgage backed securities.
The REIT started in December 2014 with about US$714mil of equity commitments from seven outside investors, “many of which have significant investments relationships with TPG,” according to a July 21 prospectus filed with the US Securities and Exchange Commission. The lender issued additional equity through its IPO, selling some 11 million shares at US$20 each for a total of about US$220mil.
CIC’s Flourish affiliate held the equivalent of 9.39 million TPG RE common shares at the time of the IPO, according to filings. Another major Asian investor, closely held Nan Shan Life Insurance Co, held 3.38 million shares, a 5.6% stake. Both figures include their respective portions of a stock dividend that TPG RE declared this month, prior to the stock sale.
Jason Chudoba, a spokesman for TPG RE, had no immediate comment. Sara Ho, an assistant vice president in Nan Shan’s finance and accounting department, declined to comment through an email.