Blackstone pursuing China deals after exiting Evergrande JV

HONG KONG Wed Jan 18, 2012 11:53pm EST

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HONG KONG (Reuters) - Private equity investment house Blackstone Group LP (BX.N) said on Thursday that it is actively pursuing further property investments in China, after a fund it controls turned a profit on the sale of its stake in a real-estate joint venture with Evergrande Real Estate Group Ltd (3333.HK).

"We are strong believers in the long-term growth prospects for the real estate market in China and will be looking for further such investment opportunities for our funds," Senior Managing Director Stuart Grant told Reuters in a statement.

Late on Wednesday, Evergrande said in a filing with the Hong Kong Stock Exchange that one of its subsidiaries had bought back a 40 percent stake in the Royal Scenic Peninsula housing development in Guangzhou for $161.6 million.

The sellers were MB Asia Real Estate Fund, which Blackstone now runs and that owned 69.2 percent of the stake, and hedge fund Elian Properties, which owned 30.8 percent of the stake.

Based on filings, that suggests the investors made close to double their investments in the project.

Blackstone has $38 billion in property holdings around the world, including the Hilton hotel chain and Universal Studios in Florida. It has 70 property investments in Asia, with about $4.5 billion in capital invested in the region.

In September, Blackstone sold its 95 percent holding in the Channel One shopping mall in Shanghai to New World Development Co Ltd (0017.HK). Although local media characterized the sale as a Blackstone retreat from China, the company still rates the country as one of the most attractive markets in Asia.

Private equity funds typically hold property for about five years. MB Asia fund, at the time run by Merrill Lynch, invested in the Guangzhou project in 2007. Blackstone took over running of the fund in November 2010.

Last March, Blackstone paid $9.4 billion for 593 shopping malls in the United States to CNPR Ltd CNP.AX, an Australian company sagging under its debt burden.

Evergrande is the second-largest developer in China, by sales volume. On Monday it forecast sales of 80 billion yuan ($12.67 billion) for this year, with management expecting a "very weak" first quarter for Chinese developers.

Evergrande shares were up 2.8 percent by the midday trading break, outperforming a 1.1 percent gain in the Hang Seng Index .HSI.

New-home prices in China fell 0.3 percent in December, from the previous month, the third straight month of declines.

(Reporting by Alex Frew McMillan; Editing by Chris Lewis)

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