National Australia Bank (Nab) has taken a 20 per cent stake in Chinese property group, Union Trust & Investment (UTI).
According to nabCapital chief executive John Hooper, the new equity holding is the next phase of nab's development.
"With UTI's focus on property, this deal represents an opportunity for nabCapital to bring our expertise in structured financing to China's burgeoning market," Hooper said.
"We also plan to work with UTI to develop investment products for our respective customer bases as the regulatory framework evolves."
As part of the agreement, Hooper will take a seat on UTI's board.
China does not yet have REIT guidelines or regulations, but in January the financial market department of the People's Bank of China, the country's central bank, listed UTI and CITIC Securities as pilot units for the operation of REITs on the mainland.
China introduced rules in 2006 requiring investors to hold property in local companies rather than in offshore firms, making it harder to list trusts in Hong Kong or Singapore.
According to an estimate by UBS in 2006, the size of the investment grade real estate market in Hong Kong and China is about US$334 billion of which 77 per cent is yet to be listed.
Completion of the transaction is conditional upon receipt of regulatory approvals.
