Boston, MA 08/27/2014 (wallstreetpr) – According to reports, The Carlyle Group LP (NASDAQ:CG) is in advance talks with China Vanke Co Ltd. The main reason behind this agreement is but the interest of CG in the shopping mall business of China Vanke Co. Ltd.
Background of the deal:
China Vanke is the largest property developer of the country and has a number of real-estate properties, shopping malls, etc. spread across all the major cities of China. The Carlyle Group LP (NASDAQ:CG) wants to buy a stake in nine of China Vanke’s shopping malls. The information was revealed by a few people close to this matter. There are different rumors about this deal in Chinese market; some say it could worth between 6 and 7 billion yuan ($976 million to $1.14 billion) while others claim that it can be worth 10 billion yuan. Both the people who revealed this information declined to come in the light as the matter was very private.
One of these two people close to this matter also revealed that both CG could also sign a non-binding memorandum of understanding (MoU) by Thursday. Although the location of the malls has not yet been finalized. When reporters tried to get in touch with CG and Vanke, both the companies denied to comment on this transaction.
What’s in there for CG:
Experts call it a win-win situation for The Carlyle Group LP (NASDAQ:CG) as this deal would give it access to the real-estate market of China which provides a yield on properties close to 4.5%-6%. China is even better when it comes to the rental margin as the average margin of commercial properties is around 60%-80% that is extremely good in comparison to other markets. Average margin of residential properties in China is around 30%-40%.
What’s in there for Vanke:
Experts call it an ideal deal for Vanke as well. The current state of Chinese real-estate is not good. There is negative growth in the market due to the economic slowdown; hence this deal with The Carlyle Group LP (NASDAQ:CG) will enable the company to generate good returns in the near future.
