http://www.businesstimes.com.sg/real...s-in-singapore
SiS unit launches new fund that targets distressed residential assets in Singapore
The SiS Real Estate Opportunity Fund, with a S$50m AUM target, sees opportunity in crises, says its manager
By Lee Meixian
[email protected]
@LeeMeixianBT
Jan 13, 2016
A NEW fund has been launched targeting distressed residential assets in Singapore, joining the likes of private-equity funds by Blackstone and SC Capital Partners.
Its manager, the newly set up SiS Asset Management (SiSAM), a unit of Hong Kong-listed SiS International, said its maiden fund will opportunistically "swoop in" on distressed or undervalued homes amid a softening property market here.
The SiS Real Estate Opportunity Fund will also look at other residen-tial, commercial and hospitality assets in Singapore and other key Asian markets such as Japan and Hong Kong. In Singapore, the commercial property sector has also suffered due to loan curbs.
The plan is to buy these properties, give them spruce-ups and reposition their tenant mixes, and then exit them at a profit at the right time. It can choose to exit before the five-year deadline is up and re-invest that capital into other properties or return capital early to investors. That said, the five-year time frame helps it to avoid seller stamp duties.
This platform, unlike other typical real estate private-equity funds, has a much more conservative AUM (assets under management) target of S$50 million. It comes with a five-year term plus two additional one-year extensions.
Unlike other private-equity funds which have tended to go after money from institutions and wealthy private investors, it is targeting individual accredited investors, offering them smaller minimum subscription denominations of S$200,000 each.
The fund will leverage off-market channels such as private business networks and relationships to widen its pipeline.
Lim Kia Hong, chairman of SiSAM, said he decided to proceed with a real estate fund first as opposed to a technology fund (despite the parent's heritage in IT) because "timing is everything" and "good opportunities come and go very fast".
He considers his business model as serving a middle ground between crowdfunding platforms and traditional venture-capital and private-equity funds - lying somewhere in between the two on the continuum of amount of funds raised and degree of regulation.
On the market, Ong Kang Lin, CEO of SiSAM, said: "Things are not looking good, which means one thing: There will be a big opportunity down the road.
"Our view is that the common accredited investor would be deprived of the opportunities. . . Without a structure like our fund, they will have to sit by and watch when the next crisis comes. They will not have access to District 9 condos, they can't look at exposure to (several office floors in) One Finlayson Green, for example."
"Recently, the Skypark@Somerset was selling at about S$1,400 per square foot. One million dollar condo. That is a one-off opportunity. One unit. Blackstone will not be looking at this and analysing this. They will be looking at big deals," he said, referring to news of a one-bedroom unit of 700 sq ft on the 26th floor of the condo which sold for S$1 million (S$1,429 psf) last November.
A year ago, Blackstone, the world's biggest private-equity fund, had also bought a 10-storey apartment block at 21 Anderson, and another 18 units at Paterson Suites - both high-end properties.
In comparison, Mr Ong said that SiSAM is of the right scale to look at smaller deals. Already, the fund is eyeing some District 9, 10 and 11 apartments, but prices for commercial strata property or small malls are "not optimum yet".
He added: "We will capitalise on disruptions in the market. We are not praying for a crisis but we believe that the conditions are there for such an opportunity."
He sees limited future supply of luxury condos in Singapore, and no lifting of cooling measures by the authorities anytime soon, even as resale prices "bottom out".
Getting into the fund comes with a flat subscription fee of S$3,000. Investors have to sign a binding agreement and place an initial 20 per cent deposit, which allows the fund manager to be go to the market and negotiate deals confidently, knowing that it has capital backing. The balance of the funds is to be paid two weeks after being "called upon".
The subscription period has begun, and will go on for about six months, ending in the middle of this year.
Reply With Quote
Originally Posted by watchlist88
