First M&A fund for long-term apartment rentals in works

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The exterior of a building with so-called youth apartments by Chinese developer China Vanke is seen in Shenzhen, China April 26, 2017.  Photo: Reuters/Bobby Yip

China Construction Bank, one of the “big four” state-owned banks, and Xinpai Apartment, a Beijing-based indoor lodging, have co-founded the first merger and acquisition fund for long-term rental apartments in China, Yicai.com reported.

The initial scale is 2 billion yuan, which will be expanded in accordance with M&A needs in the future, according to the report.

The focus of acquisition targets will include assets in tier-one and tier-two cities, said Wang Gehong, the founder and CEO of Xinpai Apartment.

They will also cooperate with property developers to tailor-make long-term rental apartments. All the assets will be designed and operated by the company.

Wang also said they plan to issue Real Estate Investment Trust-like products. Both the exit model and investment return are relatively clear, he added.

Huatai Securities thinks the transaction volume of REITs in China could reach US$1.6 trillion, with broad prospects for the development of rental housing REITs.

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