CEL real estate asset management platform EBA Investments establishes its US-based asset management platform, move signals company’s intent to expand international presence
26 February 2018 – EBA Investments, the real estate asset management platform of China Everbright Limited (“CEL”, stock code: 165.HK), announced its establishment of Everbright US asset management platform. The new company represents a major step in EBA Investments’ strategic plan to create a global market presence.
The executives leading the new platform comprise the original team members of well-regarded American asset manager Arrow RE Holdings (“Arrow”), which will be renamed Everbright Arrow
(“EBA-US”). EBA Investments prefers partnering with experienced local professionals rather than delegating its own senior staff to set up an overseas operation, as is a common practice of Chinese companies.
EBA Investments believes having an outstanding local American team will strengthen the company’s future development as a global cross-border real estate asset management firm (Global GP).
Headquartered in Dallas, Texas, Arrow is an American fund manager that specialises in retail property investment. The team manages Assets of approximately USD1.5 billion. Mainly serving institutional investors, Arrow and its affiliates have invested in more than 15 projects, with an IRR of over 25% for all exited projects. Landmark investment projects the team has been involved with include Burbank Town Center and The Paseo, both located in Los Angeles, and Lloyd Center in Portland, which represents Arrow’s strategy of targeting outdated facilities situated in prime areas and adding value through renovation and remerchandising. EBA Investments shares the view that there are immense transformation opportunities in the wake of the downturn in US retail.
The founders of Arrow, Mr Todd Minnis and Mr Mark Miller, have achieved these results over the course of a partnership spanning two decades. Minnis has been working in retail property investment since 2003. His invested projects have totaled USD3 billion and delivered strong returns.
Arrow is comprised of approximately 14 key members who have an average of 20 years industry experience, and has come from major American property investment firms like Morgan Stanley, Goldman Sachs, Deutsche Bank, GE, Archon Group and LoneStar. The company’s core team has been working together for over 10 years.
Todd Minnis, founder of Arrow
Q: What made EBA Investments decide to establish the EBA-US team?
A: Firstly, with the emergence of China, leading Chinese enterprises will make a global impact and become leading international enterprises. CEL strives to provide investment services including overseas and local asset management services to global investors as one of the world’s first tier cross-border asset management platforms.
Secondly, in the long term, Chinese capital will be allocated to assets around the world. Thus, global asset managers are required. As the pioneer of Chinese real estate PE funds, EBA Investments will be able to leverage its own advantages in cross-border asset management to provide Chinese institutional and individual investors with excellent asset management services and outstanding returns.
Thirdly, our US team leverages a well-developed platform with independent fundraising and asset management capabilities. Its long-term LPs (limited partnerships) include various American university funds, state pension funds, institutional investors and high-net-worth clients.
Finally, regarding the technical aspects of asset management, joining with an American team enables EBA Investments to bring about synergy between the Chinese and US markets. It also enables information sharing and mutual enhancement through exchange and collaboration between the domestic and overseas teams, who can learn about the operation modes and design trends of each other’s markets as well as share global vision and international resources.
Q: Why did EBA Investments choose to establish its own American team by introducing a well- developed local American asset management platform rather than stationing its Chinese staff in the US?
A: We did not intend to make an investment with Chinese funding, but rather to build up an asset management platform. Our goal is to create a world-class asset management platform. Property markets are very localised by nature, so they need to be operated by local people.
From the experience of EBA Investments, it can be seen that our development in China benefits from the full respect and confidence we enjoy from foreign shareholders and LPs. Such a high degree of trust has its roots in intercultural understanding. During our communication with the US Arrow team, we found that we both share the same ideas about globalisation and an understanding of the fundamental logic of property value, not to mention a clear and straightforward communication style, highly efficient execution and rapidly developing entrepreneurship. Moreover, given the reputations enjoyed by both CEL and EBA Investments in the fields of investment and asset management, Arrow’s current investors welcome the opportunity.
Also, the Arrow team is eager to seek guidance in its growth by leveraging the speed of China’s evolving economic development. EBA Investments, with its leading position in the Chinese real estate asset management industry, stands out as an exceptional choice for cooperation.
Q: What will be the future direction in terms of strategic development for EBA-US?
A: In the US, EBA Investments will focus on revamping commercial projects that are situated in prime locations but encountering operational difficulties. Our main targets will be large-city retail complexes. Upon acquisition, the properties will be renovated or redeveloped into apartments, office buildings and hotels, for example, or their operations will be optimised for value enhancement.
Additionally, NNN, or triple net, single-tenant properties (e.g. McDonald’s and CVS) are currently undervalued in terms of risk-return. Given the scattered nature of these properties and the understanding of the tenant’s credit and location value required of the asset manager, the threshold is high for investment implementation. Nevertheless, these projects provide stable and secure return. We plan to purchase asset pools and expand thereon to offer products with investment value for global investors.
In the meantime, we will continue to seek investment opportunities in urban renewal, such as office buildings and hotels.
EBA Investments Center in Shanghai
