Big sell-off in VinaCapital’s recent real estate strategy

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By late 2016, the Vietnam Opportunity Fund (VOF), an $864 million fund operated by VinaCapital, has withdrawn from an asset which was widely rumoured to be the 50 per cent stake it held in the Sofitel Legend Metropole Hanoi Hotel. Following the sale, the percentage of operating assets in VOF’s portfolio, as of December 2016, dropped from 8.8 to 1.4 per cent.

According to announcements posted by the fund, VOF will receive $100 million in proceeds, in two annual instalments. The Metropole stakes, which accounted for 7.4 per cent of VOF’s net asset value, were on sale for five years before the alleged deal was completed.

There are speculations on the market that a new real estate venture, co-founded by VinaCapital and American private equity firm Warburg Pincus, was the buyer in this deal. The $300 million joint venture, set up in November 2016, aims at developing and acquiring hospitality assets across Southeast Asia.

VinaCapital has yet to respond to VIR’s requests for clarification.

Meanwhile, VinaCapital’s real estate fund VinaLand also divested from a number of projects. Last month, the fund earned $10.9 million by selling its stake in Project BD, a 94.7-hectare parcel of land in the southern province of Binh Duong.

“This disposal is in accordance with both the pre-and post-2016 extraordinary general meeting stated policy to divest projects in a controlled and orderly manner. The proceeds received from this exit, in conjunction with those collected from past and future disposals, will be used to cover VinaLand’s commitments, including operating costs and distributions to shareholders,” said managing director David Blackhall in a statement.

Three months earlier, VinaLand also disposed of its share in the 7.3ha Project Ceana, located in central Vietnam. The transaction resulted in $7.6 million in proceeds for the fund.

As of December 2016, nine VinaLand projects were revalued by international consultants, as part of an ongoing appraisal programme. The fund noted that overall results were trending upwards, demonstrating continued improvements in the market and overall confidence that has flowed through to real estate land valuations.

During VinaCapital’s 2016 investor meeting, founder Don Lam revealed that VinaLand was restructuring its strategy to better suit the taste of foreign investors. Specifically, overseas investors prefer projects with an investment span of less than five years. This new strategy reduces risks, yet poses the challenge of finding fresh land plots ready for immediate development.

Lam is also overseeing the $4 billion South Hoi An integrated tourism project, which was renamed the Hoiana in December.