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Tuesday, September 08, 2009

China Sovereign-Wealth Fund Eyes U.S. Real Estate Assets

By Joanna Ossinger

FOXBusiness

China’s sovereign-wealth fund is looking to invest in U.S. real estate, possibly even through a government program created to help bail out struggling banks, The Wall Street Journal reported on Tuesday, citing people familiar with the matter.

Officials from China Investment Corp. have, in recent weeks, been talking to private-equity fund managers such as BlackRock (BLK), Invesco and Lone Star about investing in distressed real estate assets including mortgages and physical property, the Journal said.

In addition, the paper reported, CIC is considering investment in distressed assets through the Public-Private Investment Program, or PPIP, which was designed to help banks unload toxic assets with U.S. government assistance to help the financial system recover from its near-collapse.

The Journal said representatives from CIC, BlackRock, Invesco and Lone Star declined to comment.

Government officials selected managers for the PPIP earlier this year, and said more action would be taken, but no deals have been done yet. Since conditions in some markets have moderated in the second half of the year, some question whether the PPIP is necessary at all.

Also, investment in such a heavily subsidized U.S. government program by a sovereign wealth fund -- particularly that of China, which has a delicate economic relationship with the U.S. already -- could raise the hackles of some Americans.

CIC also has committed $800 million to a Morgan Stanley (MS) global property fund, the Journal reported, citing a person familiar with the matter; it added that Morgan Stanley declined to comment.

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