InfraRed NF China Real Estate Fund II exits US$20m mezzanine loan project in China
InfraRed NF China Real Estate Fund II (the “Fund”) completed the repayment of Project Rice, a mezzanine loan entered into by the Fund in 2014.
The transaction was structured as a $20 million, 3-year, interest-bearing senior loan to Cheung Wo International Holdings Limited, a company listed on the Hong Kong Stock Exchange with exposure to Tier 2 cities in mainland China. The security package included a fully occupied shopping mall in Chengdu and a residential development in Changsha.The Fund was able to unlock the value by accurately assessing the risk and pricing of a 30,000sqm mature retail asset.
This project was singled out by CBRE as a classic mezzanine case study for China. The Fund worked with the developer to guide them on business expansion and portfolio de-risking. From inception to exit, our partner was able to lower their offshore borrowing cost by 1,200 basis points.
Grant Chien, Investment Director of InfraRed NF Investment Advisers commented, “The return exceeded the Fund’s target and marked the 7th successful exit in InfraRed NF’s mezzanine investments. We simplified the investment structure and provided capital for our partner to grow the business.
We have a deep pipeline of similar special situation opportunities, the strongest in the last eight years. As China continues to deleverage and tighten liquidity, our team expects to capitalise on our existing strategy of providing capital to specialist partners to generate significant return.”