Spirit of First Cathay –

Off-Market & ‘Flip-Deals’

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International ‘Off-Market’ Deals

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Today, many investors are seeking to diversify their wealth and investments into real estate in selected high-growth locations throughout the world.

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As opportunities arise in the international market place, the very best of these are quickly secured by those market players who are ‘in the know’. The best deals rarely reach the open market. They are known as ‘off-market’ deals.

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These ‘off-market’ deals are usually the most sought after and most profitable available anywhere in the world. It is precisely because they are so rewarding, that they are keenly sought by Chinese investors.

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The Essence of the ‘Off-Market’ deal – Essential Factors

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Essential factors in controlling these deals is to know where to look, knowing who controls the deal and finally, knowing the factors likely to influence the decision maker and the negotiating pathway most likely to achieve the desired result for the investor.

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‘Off-Market’ deals - are Created

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‘Off-Market’ deals are almost always created – an opportunity is identified (usually through an agent, broker or industry contact), its deal-sensitive components quickly detected and assessed, a broad feasibility prepared, contact made with relevant stakeholders, negotiations commenced and the deal rapidly secured.

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First Cathay International Investment Group Limited’s directors and members of its Special Assignment Teams are highly experienced industry participants in identifying and creating these rewarding ‘off-market’ deals.

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International ‘Flip-Deals'

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The International ‘Flip-Deal’ – 15 proposals under review

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‘Flip-Deals’ – the purchase of real estate for early resale at a profit. This high-tempo trading approach is applied to completed, fully developed and leased commercial investment real estate – shopping centres, office developments and logistics- industrial estate and warehouse complexes.

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The Imminent Opportunity

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Individual assets, portfolios and real estate-owning entities have available real estate that can be purchased:

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• At a price below replacement cost – and possibly, well below previously ‘inked’ prices (valuations).

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• Together with the transfer of existing secured and/or renegotiated debt.

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• In part, with existing owner’s equity (if there is any) to the purchasing vehicle – new and various hybrids can be applied for each property transfer.

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• Depending on the stature and imprimatur of the purchasing party - upon extended and exclusive due diligence periods, deferred terms of completion, conditional contracts and/or carefully constructed options agreements.

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The Market – for International ‘Flip-Deals’

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There are three crucial themes in the international real estate investment market, namely specialization, globalization and most importantly, imminent opportunity - timing.

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In today’s challenging market future extremely attractive returns will come from acquiring available and heavily discounted real estate and, over time, the eventual re-figuring of that real estate into a higher valuation, and prospectively – if not assured – its future sale at high profit.

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Additionally, opportunities continue to improve for investment/risk capital to be raised from, and by large global investors, corporations and private equity players who can provide a ready market for the future allocation of their capital beyond their domestic shores and into diverse and timely real estate opportunities.

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In this way they will commence delivering both a degree of diversification and superior returns – imperative ingredients for a growing and diverse number of investors’ asset allocation models.

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Also, the global private equity real estate market is evolving, continually seeking different ways of deploying private capital into diverse and opportune real estate markets.

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All the above are potential third party buyers of ‘Flip Deals’.

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Current Actions – By First-Global - (an affiliate)

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• A new Hong Kong incorporated investment vehicle namely, First Cathay – Global Real Estate Partners is being incorporated to purchase real estate specifically targeted for early resale at a substantial surplus.

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• First Cathay – Global Real Estate Partners initial mandate will be to identify stressed real estate-owning entities with assets for sale at attractively discounted prices. Additionally, individual specifically stressed real estate assets and portfolios will be included as ‘one-off’ acquisitions. First Cathay-Global is currently reviewing 15 such proposals.

 

Contra Deals - Chinese  Investor Example Only

 

      ​Contra Chinese/International Investments – Investment in China and Internationally: -

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• First Cathay’s contacts in real estate and private equity investment circles has identified parties and major institutional investors keen to invest in Chinese real estate and investments generally.

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• FCIIGL’s growing list of international Clients outside China are looking to invest in high growth locations throughout mainland China – mainly Shanghai, Beijing, Wuhan, Xian, Chongqing, Wuxi and Guangdong.

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• Of particular interest to these Clients are investments in commercial leased property but also in development property (office, industrial, tourism and shopping centers) – particularly where these assets are located in regional Special Economic Zones.

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• FCIIGL through its bankers and legal advisors is negotiating a funds-contra investment vehicle which allows the international investor to invest in China with a contra (or funding offset) with a similar size investment by a Chinese investor in real estate in the West.

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• FCIIGL has created access to a team of contra-pricing specialists (part of an SAT) to propose the optimum pricing considerations, currency issues, taxation sensitivities and offsets available for these and related transactions.