China Investment Corp (CIC), the country’s sovereign wealth fund, is considering investments in distressed US real estate, the Wall Street Journal reported, citing people familiar with the matter. CIC officials have held meetings with private equity fund managers, BlackRock, Investco and Lone Star Funds about investing in mortgage securities backed by office buildings, hotels, shopping malls and other commercial property. The sovereign wealth fund may also buy direct interests in buildings and invest in the US Treasury Department’s Public-Private Investment Program (PPIP). Under the program, CIC would partner with the US Treasury to buy troubled or toxic US mortgages, although CIC would be limited to a 9.9% stake in each PPIP fund. It is unclear how much CIC will allocate to US real estate investments, but analysts said that in order to achieve diversification in its portfolio the fund would need to invest between US$4-10 billion over the next 18 months.
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