US private equity firm Angelo Gordon has raised $1.3 billion for its latest Asia real estate fund, according to a statement by the company today.
The capital raising brings AG Asia Realty Fund IV, the fourth in the company’s series of Asia opportunistic funds, to its hard cap, exceeding Angelo Gordon’s original target by 30 percent. News of the fund raising was first reported yesterday by PERE.
Angelo Gordon’s milestone makes it the latest private equity firm to raise $1 billion or more for investment in Asian real estate opportunities within the last year, as global investors continue to turn to the Asia Pacific region in search of yield.
Focus on Japan, South Korea and Greater China
The new fund received support from participants in earlier Angelo Gordon Asian strategies, including the Minnesota State Board of Investment, as well as bringing in new backers.
We are thankful for our new and returning investors’ confidence in our strategy and approach, which have remained consistent and contributed to the solid growth of our platform over the past 13 years,” Angelo Gordon’s head of Asia real estate Wilson Leung, said in a statement. “We continue to see a wealth of compelling investment opportunities in Asia, and the depth of our experience and strength of our network of local operating partners make us well-positioned to capitalize on those opportunities, improve asset performance, and drive value for our investors.”
For its latest fund, Angelo Gordon, which has acquired $6 billion in Asian properties since it began investing in the region in 2005, will be targetting opportunities in Japan, South Korea, Hong Kong and mainland China, according to the company.
The new vehicle is said to be sector agnostic, with Angelo Gordon’s previous investments in Asia having included offices, shopping centres and residential developments, according to Mingtiandi records.
Angelo Gordon filed the official paperwork for AG Asia Realty Fund IV with the US Securities and Exchange Commission (SEC) in September last year. In May of last year the Minnesota State Board of Investment committed a total of $250 million to funds managed by Angelo Gordon, with $100 million of that eventually ear-marked for the Asia vehicle. Then, in November last year, the Seattle City Employees Retirement System committed up to $15 million to the fund, according to public records.
Other commitments to the fund include $100 million from the Los Angeles County Employees Retirement Association, with another $15 million coming from the Sacramento County Employees Retirement System.
The total capital raised for Fund IV represents approximately a 35 percent increase over the $850 million which Angelo Gordon raised for AG Asia Realty Fund III, which reached a final close in December 2016.
Selling Commercial Assets in Hong Kong
Angelo Gordon has already completed eight transactions through AG Asia Realty Fund IV, according to the PERE account, without specifying any assets.
In its statement Angelo Gordon indicated that the company has recently completed the acquisition of a 600,000 square foot sale-leaseback office property in Beijing with one of China’s largest e-commerce companies, as well as selling a pair of residential land sites in Seoul for approximately $300 million.
In Greater China, the fund manager’s team has kept busy this year disposing of properties, including agreeing in May to sell a retail podium in Hong Kong’s Tseung Kwan O area to Hong Kong’s Wang On Group for HK$780 million ($99.42 million).
Angelo Gordon had invested in that 32,564 square foot (3,025 square metre) retail podium through a joint venture with Mordril Properties, a private investment firm controlled by Hong Kong’s Chellaram family.
In 2018, Angelo Gordon had also teamed up with Mordril to purchase nine floors in the C-BONS International Centre in Kowloon East for HK$1.2 billion, with the partners moving to dispose of those strata assets this year.
In January 2018, the firm had sold the Metro Tower in Seoul, which it owned together with local partner Vestas Investment Management, to a fund managed by invested by Tongyang Life Insurance and managed by South Korea’s ANDA Asset Management Co for KRW 240 billion (then $225 million).
In Japan, Angelo Gordon has focused on acquisitions of office assets and logistics, having recently acquired $500 million in logistics assets in the Greater Tokyo and Osaka markets.
Fund Momentum Continues
Angelo Gordon’s success with its latest Asia fund comes six months after its hometown competitors from KKR were said to be nearing a first close on their initial Asia real estate fund, which aims to raise $1.5 billion in equity.
In June this year, another New York firm, Warburg Pincus reached a $4.25 billion final close on Warburg Pincus China-Southeast Asia II, the company’s second Asia private equity fund, which covers both real estate and corporate investments.
Among locally-based players, Hong Kong’s Gaw Capital Partners closed on $1.3 billion in funding for its Gateway Real Estate Fund VI in October last year, and Phoenix Property Investors last month was reported to be delaying a final close on its Phoenix Asia Real Estate Investments VI in order to bring that vehicle over the $1 billion funding threshold.