Warburg Pincus-backed Nova links up with Sunac to invest in China

Beijing, China. Photo credit: anthonychong / Pixabay

A Shanghai-based division of developer Sunac China has partnered with property management firm Nova Property Investment to establish a $3.2-billion fund to acquire and redevelop aging hotels, office buildings and shopping centers in mainland China. 

Sunac and Nova, which was established by U.S. private equity firm Warburg Pincus, plan to invest in buying and redeveloping the properties in first- and second-tier cities using the fund. The companies will each own a 50-percent stake in the fund manager.

Sunac and Nova will co-manage the redevelopment projects acquired by the fund while Sunac will convert the properties. Their fund is currently in talks with local and overseas investors to raise money for these investments.

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The two companies are turning their focus onto redevelopment opportunities as China's land supply for new developments decreases. "We have now reached the end of the era of new land supply in China, as the cities of Beijing, Shanghai, Guangzhou and Shenzhen, along with key second-tier cities, have come into the age of redevelopment," Tian Qiang, executive director of Sunac, said at a press conference announcing the new fund. 

This is Sunac’s latest investment following its project buying spree in 2017. These purchases include Sunac’s acquisition of a 91-percent stake in 13 “Cultural Tourism City” theme park developments from Dalian Wanda Group in July last year. Guangzhou R&F Properties entered the $9.3-billion deal later on to acquire a 76-hotel portfolio Sunac originally planned to buy. The developer recently acquired a 14-percent stake in Dalian Wanda Commercial Properties with a Tencent Holdings for close to $5.4 billion in January 2018.