Phoenix Property Investors is said to have postponed the final closing of its latest opportunistic real estate fund to allow time to lock in more capital, after already hitting its $900 million target.
Sources cited by PERE said that a formal fundraising extension of up to ten weeks had been granted by the fund’s investors, while the original hard cap had been increased by approximately 20 percent.
The private equity investment shop founded by Samuel Chu and Benjamin Lee in 2002 is said to have scheduled a new final closing for September, three months later than originally planned.
The sixth fund in Phoenix’s opportunistic series, Phoenix Asia Real Estate Investments VI reached a first close of $221 million last January after being launched at the end of 2017.
Looking to Join the $1B Club
The three-month postponement came about after a small number of limited partners had asked for more time to complete internal due diligence and to sign off on commitments, according to sources in contact with PERE.
Phoenix is said to have taken these commitments into account when lifting the fund’s hard cap by around 20 percent, giving a new target of somewhere in the region of $1.1 billion.
Having already raised its largest fund to date after hitting its original hard cap of $900 million, the new $1 billion-plus target, if achieved, will see Phoenix join a select group of investment managers that have raised $1 billion for a closed-end real estate fund.
Fund VI is the first of Phoenix’s opportunistic vehicles to have added Australia to its investment remit, with previous initiatives in the series focused on China, Hong Kong and Japan.
The management fee for Fund VI is said to be two percent, the same as Fund V.
A Hong Kong-based capital adviser quoted by PERE said that the potential pitfall of raising more capital than originally planned is that it can lead to diluted equity stakes for initial investors, as well as increasing the possibility that valuable time is spent fundraising rather than deploying capital.
In response to this appraisal, a source reported to be directly involved in the process said that neither the delay nor the increase in hard cap would have an impact on allocation plans, with the fund’s capital already deployed across more than ten deals.
The source added that the firm had not sought any new investors.
Having managed over $10.5 billion of gross real estate assets since the firm started seventeen years ago, Phoenix’s fifth opportunistic fund closed at its $750 million hard cap in December 2013, while Fund IV closed on $460 million in 2010.
Phoenix officials reached by Mingtiandi declined to comment on the report.
Community Malls and Tower 535
The investment manager’s most recent publicly announced deal came last October when it acquired a trio of community malls in the Hong Kong’s Tseung Kwan O area for HK$3.38 billion from developer Wheelock.
With a total GFA of around 300,000 square feet (27,870 square metres), Phoenix paid a unit price of HK$11,266 per square foot for the shopping centres.
The private equity fund manager has also confirmed that it still has an interest in Tower 535 in Causeway Bay after market sources said an offer had been received to buy the property last month.
The investment manager retains a stake in the 270,473 square foot steel-and-glass skyscraper alongside its fund, after having sold a 50 percent share in the Skidmore, Owings and Merrill-designed property to a South Korean institution in 2015.
Hong Kong Fund Managers Ramp Up Opportunistic Vehicles
Phoenix upping the ante on its latest vehicle follows a report last week that PAG had set a bullish target for its next opportunistic fund.
The Hong Kong-headquartered alternative investment manager is said to be aiming for $2 billion with its Secured Capital Real Estate Partners VII (SCREP VII) fund, less than two years after raising $1.9 billion for SCREP VI.
PAG’s SCREP series aims to invest in high-yielding real estate projects across Asia, but with a particular focus on Japan, where the managers of the Secured Capital series are based.