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Yishan Capital Targets $250 Million for Asian Real Estate Fund

Yishan Capital Partners Pte., a real estate asset manager, plans to raise $250 million next year to invest in properties across Southeast Asia.

The company, which has invested about $50 million in Indonesia and Cambodia, plans to start raising funds in the first quarter of next year, Managing Partner John van Oost said. Yishan will invest in residential buildings, shopping malls and industrial projects such as warehouses in countries including Singapore, Indonesia, Thailand, Vietnam and the Philippines, he said.

Yishan is trying to capitalize on opportunities in Southeast Asia where a growing middle class, rising disposable incomes and changing lifestyles spur growth. Five Asian economies -- Indonesia, Thailand, Philippines, Malaysia and Vietnam -- along with China and India will outpace the rest of the world over the next two years, the International Monetary Fund said in a July 16 report.

“If you want to have growth and capital appreciation, you have to go to emerging markets,” van Oost said in an interview in Singapore yesterday. “Indonesia looks the most promising market while Philippines will be the next big market.”

Singapore-based Yishan will announce joint ventures in Indonesia next week, van Oost said. One of the ventures, with a Jakarta-based real estate firm, will manage shopping malls across Indonesia, while the other venture, with an industrial group, will build warehouses in Indonesia, he said, declining to elaborate. The company also plans to announce a residential project in Jakarta in early 2013, he said.

‘Poorly Managed’

Still, not all Asian countries are attractive, van Oost said, citing the nascent property markets in Vietnam and Myanmar.

“Vietnam is a no go as it’s a poorly managed country -- it has great potential over the next 20 years to 25 years but they have to clean up their management system and governance,” van Oost said. “Myanmar is emotionally interesting, but we won’t go there for the next 10 years as it’s too early to invest.”

In Singapore, Yishan is focusing on shopping malls, while it will stay away from residential, office and industrial projects in the island city because prices are expensive and don’t offer value, van Oost said.

Yishan will raise money from existing investors in Europe which are primarily pension and insurance companies. It expects to generate as much as 25 percent in net internal rate of return with the fund, van Oost said. The average deal size in Asian property assets will range from $15 million to $20 million, he said.

“The big deals are not the most profitable,” van Oost said. “Real estate is very much a family business in Southeast Asia. You have to know them personally to partner with them.”

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