CIC to invest in US real estate

The Chinese sovereign wealth fund has held talks with BlackRock, Invesco and Lone Star as it looks to the US real estate market and distressed mortgage securities, according to the Wall Street Journal.

The Chinese sovereign wealth fund, China Investment Corp., has held talks with private equity real estate managers as it eyes investing in distressed US real estate.

According to a report in the Wall Street Journal, CIC has spoken with BlackRock, Invesco and Lone Star Funds as it looks at investing in assets from distressed mortgage securities to ownership interests in properties.

BlackRock and Invesco were among the nine fund managers pre-selected by the US Treasury to take part in the government’s Public-Private Investment Program (PPIP). PPIP is intended to help rid banks of toxic mortgage securities by attracting private investors to buy them with public financing.

Media reports in August said the $200 billion Chinese fund had spoken with all nine managers, which also include Angelo Gordon and GE Capital Real Estate, Marathon Asset Management, Oaktree Capital Management and RLJ, although CIC would not invest with all of them. A Reuters report at the time suggested CIC would invest up to $2 billion in the US mortgage sector in anticipation of a market bounce.

The Journal report said that in recent weeks CIC had held talks with BlackRock, Invesco and Lone Star about investment opportunities in real estate “from mortgages backed by offices, hotels and other commercial property to ownership interests in actual buildings”.

The fund, the report noted, was looking to invest with fund managers that specialised in both debt and equity investing.