Hogan Lovells Advises on Restructuring of US$1 billion Chinese Real Estate Development Fund
18 October 2013
HONG KONG, 18 October 2013 – Hogan Lovells has advised the general partner of Trophy Property Development L.P. (the "Fund" or "Trophy Property") on a restructuring of the Fund's underlying real estate assets in China, and its internal management (the "Restructuring").
The Fund is a US$1 billion Cayman Islands exempted partnership, which has invested in real estate projects in China. The Restructuring was approved by investors following a consultation process and their consideration of an alternative proposal to manage the Fund which was made by Pacific Alliance Group, a Hong Kong based alternative investments firm.
The Fund was formed in 2008 with US$1 billion of equity from approximately 150 investors to invest in five Chinese developments by Hong Kong-listed Shui On Land. However, rising costs and conflicts between stakeholders led to costs overruns, delay and debt. The parties subsequently agreed to restructure the Fund and its management.
Pursuant to the Restructuring, the Fund will become majority owner of a large residential project in Shanghai, in exchange for its minority investments in four developments in other key regions in China. The transaction is expected to close in the fourth quarter of 2014, with documents signed on 30 September 2013.
As part of the Restructuring, Winnington Capital and its founder, Kenneth Hung, stepped down as the Fund's former investment advisor and principal, and were replaced by Venator Real Estate Capital Partners (Hong Kong) Limited ("Venator"). Venator is led by president Philip Mintz, former Asia head of real estate at Warburg Pincus, and chairman Mehmet Dalman, the former chairman of London-listed miner, Eurasian Natural Resources Corporation.
Before the Restructuring was approved, Trophy Property received an unsolicited takeover bid for both the Fund and its management by Hong Kong-based alternative investment firm Pacific Alliance Group. After consideration of this bid, the terms of the proposed asset restructuring with Shui On Land, and the capabilities of the new Venator management team, the Restructuring was ultimately approved by a significant majority of the Fund's investors on 30 September 2013.
The team advising the general partner, and now Venator, was led by Hong Kong partner Neil McDonald, Head of the Asia BRI team. Other members of the team included Shanghai partner Andrew McGinty and senior associate Roberta Chang, and Hong Kong consultant Laurence Davidson and associates Harriet Dedman and Amos Yoo.