(Yicai Global) March 12 -- China Construction Bank Corp., CCB, one of the country's major state-backed banks, and China Young Professionals Apartments, CYPA, a long-term rental apartment operator, have teamed up to form a real estate acquisition fund through asset securitization, aiming to promote the developer-operator rental housing business model.
The initial size of the fund is CNY2 billion (USD316 million), and its assets under management will increase in line with business development. Its target assets are mostly properties and long-term rental apartments in prime locations in first- and second-tier Chinese cities, with CYPA acting as the product designer and operator, news outlet Gmw.cn reported today. China Construction Bank will provide 50 percent of the initial capital as one of the sponsors.
Founded in 2012 by China Young Professionals Apartment Management Ltd. as a rental apartment service brand for urban professionals, CYPA introduced the country's first real estate investment trust, or REIT, focusing on the long-term apartment lease market on the Shenzhen Stock Exchange last December
Successful listing of the REIT laid the groundwork for the real estate acquisition fund, the firm's founder Wang Gehong said. Furthermore, the CCB is the leading financial institution in the domestic rental housing market, so the partnership between the bank and CYPA has significant implications for financial service innovation in this field, he added.
The bank spearheaded a long-term apartment rental initiative jointly with several real estate developers last November. It rolled out China's first rental housing loan product "An Ju Dai" for individual tenants late last year. An eligible applicant may apply for loans of up to CNY1 million, and the maximum loan period is set as 10 years.