GT Financial Group launched a China property fund on 25 April 2006 - GT China Real Estate Fund, an open-ended fund domiciled in Cayman Islands.
GT Capital Limited, the Investment Adviser of the Fund, is a Hong Kong SFC licensed financial corporation engaged in asset management, wealth management, securities brokerage and futures trading. Its parent company, GT Financial Holdings Limited (GT) is a 100% owned subsidiary of Poly Investments Holdings Limited (Poly), a Hong Kong mainboard listed company (Code: 263).
Poly is a conglomerate running a wide range of businesses in mainland China, including but not limited to property investments, power generation, iron ore trading, hospitals and shopping centres.
The new fund provides global investors with readily available access to the booming mainland China property market, and unlike REITs and traditional property equity funds, it has been set up to achieve direct acquisition of property projects through a number of SPVs. It aims to deliver consistent superior absolute returns over the medium to long term, by investing in high quality commercial properties, shopping malls, industrial properties, hotels and car parks, etc. in prime cities throughout the country.
Project sourcing and due diligence on both developers and owners are conducted through GT's well established networks in China, facilitating a more thorough and cost effective research function 'on the ground'. The company believes this in turn leads to competitive advantage in the negotiation of terms, and subsequent enhanced returns will be passed on to investors.
The fund is conservatively targeting returns of 15 to 20% per annum, attributing profits to acquisition discounts, high rental yields and capital appreciation of chosen properties. It also adopts a flexible management style in the purchase and disposal of underlying properties, including the use of leverage up to 100% of NAV, and a tax efficient structure to further enhance returns. The fund is denominated in US dollars with RMB property assets, and should therefore benefit from any potential appreciation in the RMB.
The fund has secured the world-class services of Standard Chartered Bank as Administrator cum Custodian, with independent property valuation performed by Vigers and American Appraisal. Sidley Austin and Deloitte have been appointed as Legal Adviser and Auditor cum Tax Adviser, respectively.