CIMB seeks to set up private real estate funds here

Forms JV with S’pore firm to invest in Aussie property

The real estate division of Malaysia’s CIMB Group is looking to set up private real estate funds in Singapore to invest in Australian property.

CIMB has formed a joint venture with Singapore-based TrustCapital Advisors – CIMB-TrustCapital Advisors Singapore, or CIMB-TCA – which is now raising equity to invest in office properties in Melbourne and Sydney.

TrustCapital Advisors’ managing director Chris Cheah told BT the target is for the JV to grow total assets under management in Australia to A$3 billion (S$3.87 billion) in five years. Several funds will be set up and at least one will be listed, he said.

Mr Cheah owns 50 per cent of TrustCapital Advisors, which has a 30 per cent stake in CIMB-TCA. The remaining 70 per cent is owned by CIMB Real Estate.

With the setting up of CIMB-TCA, Singapore has become CIMB’s international headquarters for private real estate funds outside Malaysia. The group has another JV, with Singapore’s Mapletree Investments, to run its Malaysia-focused private real estate funds.

For this newest JV, CIMB will provide A$20 million of seed money. The JV company will tap CIMB’s private and investment banking units to raise equity for its funds, Mr Cheah said.

The first fund CIMB-TCA sets up will target completed office buildings in Australia. Mr Cheah said Australia was picked as the first market to enter because it is ’safe’.

‘If you look at the global economies right now, I think the Australian economy is one of the strongest,’ he said. Occupancy rates for Australian office space stand at more than the 90 per cent generally. And the market also provides good returns – broadly speaking, office buildings offer yields of 7 per cent or more per year, said Mr Cheah.

He is also very familiar with the Australian market – as the former head of property for Australia’s ANZ bank. His partner David Tan, who owns the remaining 50 per cent of TrustCapital Advisors, is the former CEO of APL Japan Trust and led Singapore-listed CapitaCommercial Trust before that.

CIMB Group is Malaysia’s second-largest financial services group.

Source : Business Times, 19 Nov 2009