UBS to Manage China’s First Fund Investing in Rental Homes

UBS Global Asset Management (China) Ltd. will start a fund that invests in Shanghai’s social housing market, the first investment fund of its kind in China.

The fund, together with Shanghai Hongkou Public Rental Housing Investment and Administration Co., will invest in public rental homes in Hongkou district in Shanghai, UBS said in an e-mailed statement today. It will convert into a publicly listed real estate investment trust in China when the regulator allows, UBS said, without saying how much it plans to raise.

Chinese developers have been seeking different ways to finance projects amid the government’s efforts over the past three years to curb the property market. Share sale plans announced by developers including Xinhu Zhongbao Co. and China Merchants Property Development Co. this month reinforced expectations that regulators will ease limits on fundraising by developers as slowing economic growth spurs adjustments to the tightening policies.

“Investors in the fund have access to a stable cash dividend payout as well as to potential asset appreciation,” Xinyuan Ling, China chairman of UBS Global Asset Management, said in the statement.

Taiping Asset Management Co., a subsidiary of China Taiping Insurance Group Co. is the lead private investor in the fund, while UBS SDIC Fund Management Co. is the fund’s investment adviser, according to the statement.

Fundraising Plans

The country doesn’t have publicly traded REITs. China Securities Regulatory Commission will release draft rules on such products for public feedback, China Business News reported on May 31, citing an unidentified person.

Xinhu Zhongbao said on Aug. 2 that it planned to raise as much as 5.5 billion yuan ($899 million) in a private placement to finance two social housing projects.

Former premier Wen Jiabao pledged in 2011 that the government would build as many as 36 million social-housing units, including public rental homes, within five years.

In 2012, the government invested 412.9 billion yuan in social housing, while another 466.8 billion yuan came from bank loans, bonds and other social financing, according to a government report on Aug. 10.

— With assistance by Bonnie Cao

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