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AIMS set for China's first listed property venture

Florence Chong July 16, 2009

Article from: The Australian

SYDNEY'S AIMS Financial Group, which is in the process of taking over fund manager MacarthurCook, has positioned itself to launch China's first listed property trust.

According to industry sources, China intends to launch "two or three" pilot REITs this year.

MacarthurCook, which also runs mortgage funds and property securities funds, would provide the funds management capability for a venture in China.

AIMS had agreements with the Tianjin municipal government, paving the way for it to establish a range of financial products.

Tianjin authorities can see that we have the platform needed to help their funds management industry get off the ground," Mr Wang said.

Between 2000 and last year, AIMS raised directly and indirectly $3 billion in funds from capital markets.

Mr Wang said Tianjin, which had been singled out as the country's next economic development region, had been designated the test bed for innovative financial products.

Unlike Shanghai, which had become a financial centre for the mainland and catered to international companies, Tianjin would serve domestic markets with products such as REITs.

Tianjin launched China's first Western-styled private equity fund, the Bohai Industrial Investment Fund, in 2007.

The Chinese have a lot of money to invest, but there is little choice," Mr Wang said.

It is either real estate or a high-risk stockmarket. The authorities want products which offer reasonably high returns, but with low risks. This is one reason that REITs are being considered.

AIMS, to establish its Asian head office in Tianjin, will benefit from incentives from the municipal government, which intends to attract financial services firms.

We are the first wholly owned foreign financial services company to be allocated a block of prime land to build our China head office under its incentive scheme; Mr Wang said.

An industrial REIT would be the first product offered by AIMS.

Many international manufacturing companies operate in Tianjin, which has the only deepwater port in northern China," Mr Wang said.

Normally, they would build and own their factories because there is no alternative. An industrial property trust will fill a niche in the market and do well. It will be able to generate good, reliable returns for investors.

Mr Wang said AIMS had been building a foundation in China over the past 15 years.

We see ourselves as a bridge between China and Australia," he said.

But AIMS will face competition from outfits such as Singapore's CapitaLand, which listed CapitaRetail China Trust on the Singapore's stock exchange in 2006.

CapitaLand manages six private real estate funds in China, and these could be listed when the Chinese REITs legislation is in place.

AIMS chairman and chief executive George Wang said the final pieces of Chinese legislation were being implemented.

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