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Beijing Properties in talks to set up fund to buy 6.42B-yuan property portfolio

ESR Cayman Ltd. and a Beijing Properties (Holdings) Ltd. subsidiary signed a letter of intent for transactions that will ultimately lead to the establishment of a privately offered fund that will buy land plots in China worth about 6.42 billion yuan.

According to the May 16 letter, ESR and Beijing Properties' China Logistics Infrastructures (Holdings) Ltd. will have the fund structured as an offshore limited partnership that will buy equity interests in a number of subsidiaries directly or indirectly owned by China Logistics. The target companies own the portfolio that the limited partnership will plan to buy at a timeline and purchase price that are yet to be determined.

In addition, ESR and China Logistics will jointly form an offshore general partner that will set up the fund, the Hong Kong-listed Beijing Properties said in a filing.

As part of the deal, ESR will deposit US$45 million in a joint bank account. The possible property deal has an exclusivity period that will run to July 31 from the day the deposit is made.

China Logistics is primarily involved in modern general warehouses development and operations, while ESR, which recently received US$306 million investment from JD.com Inc. to hunt for investment opportunities, is a pure-play pan-Asia logistics real estate developer with a US$12 billion assets under management.

As of May 15, US$1 was equivalent to 6.38 yuan.