BlackRock Real Estate is raising capital for the fifth in its series of APAC-focused value-add property investment vehicles, with reports indicating that the size of the fund will eclipse its $500 million predecessor.
Having already secured commitments of between $300 million and $350 million for Asia Property Fund V, BlackRock is expected to soon reach a $500 million first close on its latest effort, setting up the new installment in the value-add strategy to surpass the capital haul of its Asia Property Fund IV, according to Deal Street Asia, which first reported the initiative.
Sources confirmed to Mingtiandi that the asset manager is preparing to formally launch the vehicle in the next few weeks after receiving strong interest from investors, including returning participants from its previous funds.
“While we are not in a position to comment on the specifics, we are on track to launch the next value-add strategy in the near future,” a BlackRock spokesperson said to Mingtiandi.
Targetting Asia Pacific Office Deals
Asia Property V will invest in commercial real estate assets in Australia, Japan, Singapore, China, and Hong Kong, in line with the value-add strategy of Asia Property Fund IV, according to a source familiar with the matter.
The source said that the new strategy, similar to its predecessor, would mainly target office projects but would also invest in retail opportunities. A BlackRock spokesperson indicated that the performance of Asia Property IV may have inspired interest in its latest effort.
The investment period for the asset manager’s previous value-add strategy has recently ended, according to the BlackRock representative, with that effort having closed on $500 million in equity investment in 2017, after initially targetting $1 billion in investment.
“Investment performance has been very strong and our investors are very pleased with this,” the BlackRock spokesperson said. “We have also been divesting some of the investments with strong returns.”
Although BlackRock has not disclosed the investors of its current fund raise, previous BlackRock strategies have received commitments from pension funds and family offices, with the Employees’ Retirement System of the State of Hawaii committing $50 million to Asia Property IV, according to IREI.
The news of the fund raise follows the resignation last week of BlackRock’s head of investments for Asia Pacific real estate, Greg Lapham, with BlackRock’s head of Asia Pacific real estate John Saunders stating that his departure would have “no impact on the strategic direction of the real estate investment platform”.
BlackRock Takes Aim at Asia Growth
The firm’s progress on the new Asia-focused fund follows chief executive officer Larry Fink’s announcement last year that the company would target the region as a growth hotspot.
With $6.84 trillion in assets under management globally as of the end of June this year, but only $471 billion of AUM in Asia at the end of 2018, the BlackRock chieftain identified Asia, and especially China, as being key to the firm’s overseas expansion.
Five months ago, Geraldine Buckingham, BlackRock’s head of Asia Pacific was given greater decision-making powers in the region as part of a push by the asset manager to expand growth beyond the US.
Asia-focused Real Estate Funds Gain Momentum
BlackRock joins a number of global and regional private equity firms that are in the process of raising funds aimed at the Asia Pacific real estate sector.
Two weeks ago, CBRE GI filed a Form D with the Securities and Exchange Commission in the US which revealed that it had secured commitments totalling $115 million for Asia Value Partners V, a new Asia Pacific fund.
Focusing on logistics real estate opportunities, the fund follows just under two years after the private equity real estate affiliate of NYSE-listed real estate agency CBRE Group announced the $1 billion final closing of its Asia Value Partners IV.
Last week, Hong Kong-based private equity firm Phoenix Property Investors, which is raising capital for its latest opportunistic real estate vehicle, postponed the fund’s final closing to allow time to lock in more capital, after already hitting its $900 million target.
It was also reported two weeks ago that Hong Kong-based alternative investment manager PAG had begun raising funds for its latest opportunistic vehicle, less than two years after raising $1.9 billion for Secured Capital Real Estate Partners VI fund (SCREP VI).