CBRE Global Investors has closed the fifth iteration of its pan-Asia value-add fund series at a hard cap of $900 million — around 10 percent less than what it achieved for the fourth edition of the strategy – according to an announcement by the private equity affiliate of NYSE-listed CBRE Group.
The firm said that, not including co-investments, the logistics-focused fund – dubbed Asia Value Partners V – is expected to have a total purchasing power of $2.3 billion after leverage.
Focusing on developed markets in Asia Pacific, AVP V will target opportunities to develop or reposition logistics assets in the region, while also investing in select investments in other sectors that offer attractive returns or where the fund can identify underpriced assets.
CBRE GI confirmed to Mingtiandi that the pooled investment vehicle will allocate up to 60 percent of the fund value in Japan, while deploying between 20 and 30 percent in China. The company expects to invest the remainder in South Korea and Australia.
The final closing comes six months after Mingtiandi revealed that CBRE GI had secured commitments totalling $115 million for the fund from a pair of undisclosed US investors, and just over two years after the firm announced the $1 billion final closing of its Asia Value Partners IV.
Continuing Interest in Asia Pacific Real Estate
“Interest in APAC real estate investments remains high, which is reflected in the strong demand from investors worldwide for this fifth iteration of our regional value-add real estate strategy,” said Bernie McNamara, CBRE GI’s global head of investor services and solutions.
Commitments were secured from sovereign wealth funds, pension funds – including the State Board of Administration of Florida – and other institutional investors from across North America, Europe and the Middle East.
The firm noted in its announcement that AVP V is a “continuation and evolution” of a strategy implemented through the fund series since 2009, which during that time has achieved an average net internal rate of return (IRR) of over 17 percent after all fees and taxes.
Deepening Confidence in APAC Logistics
Through Asia Value Partners V, CBRE GI is continuing to focus on logistics opportunities, as the growth of e-commerce and online shopping helps drive demand for warehouse facilities.
“The logistics sector in Asia Pacific continues to be supported by solid consumption growth and technology adoption within the region, which in turn is generating an increased investment demand for the type of real estate AVP V is creating – high-quality logistics assets completed to high standards and modern specifications,” said Adrian Baker, CBRE GI’s chief executive officer and chief investment officer in Asia Pacific.
Shane Taylor, the firm’s Asia Pacific head of strategy and research, noted that the fund’s focus on logistics investments near major metro areas had gained “added relevance” following the coronavirus outbreak.
“For households still need to consume goods and in avoiding conventional retail formats have embraced e-commerce even more enthusiastically,” Taylor said. “We have seen modern logistics facilities and their occupiers rise to the challenges presented by this crisis.”
Deploying $190M in Japanese Logistics, Multifamily
CBRE Global Investors has already put capital from this latest fund to work acquiring $190 million of real estate through a pair of investments in Japan. The fund manager says that, by 30 June, it expects to have deployed a further 40 percent of the vehicle’s capital implementing a pipeline of transactions.
Just four days ago, through a separate mandate unrelated to AVP V, the firm announced that it had teamed up with German investment management company Universal-Investment to acquire a 42,000 square metre (452,084 square foot) logistics property near Kobe on behalf of German pension fund Bayerische Versorgungskammer (BVK) for an undisclosed sum.
That Kobe warehouse deal came after Universal-Investment and CBRE GI had worked together during August of last year to acquire a portfolio of 18 Osaka residential assets on behalf of Munich-based BVK.
Crowding into Japan
CBRE GI’s initial investments from its latest closed fund follow a wave of acquisitions in Japan, as investors target stable returns.
Just last week, Nuveen Real Estate said that it had paid $140 million to purchase a portfolio of Japanese multifamily assets on behalf of its open-ended Asia Pacific Cities fund, with sources who spoke to Mingtiandi indicating that the investment firm acquired the ten residential properties in Tokyo and Osaka from Hong Kong fund manager PAG.
In another residential transaction a month ago, Blackstone notched Japan’s largest property deal ever when it agreed to buy back a portfolio of Japanese rental apartments from troubled mainland insurer Anbang Insurance for JPY 300 billion ($2.9 billion).
Three months before that multifamily deal, LaSalle Investment Management announced the launch of its LaSalle Japan Property Fund, which it seeded with a JPY 105 billion purchase of six assets in Tokyo, Osaka, Nagoya and Fukuoka.