AEW Launches Fourth APAC Value-Add Fund

Global real estate investment manager AEW Capital Management has launched fund raising for its fourth Asia Pacific value-add fund, according to an SEC filing.

The Boston-based private equity firm lodged its Form D for AEW Value Investors Asia IV with the United States Securities and Exchange Commission on 10 December, and an AEW spokesperson confirmed to Mingtiandi that the company is in the process of raising capital for the pooled fund.

AEW’s chief investment officer for Asia Pacific, Jason Lee, has been appointed as the senior portfolio manager for the new closed-ended vehicle, which the 38-year-old company is kicking off just eighteen months after it closed Value Investors Asia III at $1.12 billion — exceeding its initial target for episode three in the series by $750 million.

Continuing Investor Appetite for APAC

Although fund raising is underway on VIA IV, AEW’s spokesperson was unable to disclose the prospective size of the vehicle or potential limited partners in the initiative.

Global CEO and chairman Jeff Furber’s team, which has continued its investment momentum in the region over the past twelve months, raised the $1.12 billion for its previous APAC fund from an array of US and Europe-based public and private pension funds and insurance firms.

US state pension fund manager the Florida State Board of Administration (SBA) invested $100 million in VIA III, according to a report, while California State Teachers’ Retirement System committed an additional $100 million, alongside a $50 million investment from the Los Angeles County Employees Retirement Association.

The new fund is expected to follow a strategy similar to that of its predecessors with a focus on building up a portfolio of assets in key gateway cities across the region, particularly Singapore, Seoul, Hong Kong, Shanghai and Beijing, as well as the Australian cities of Sydney and Melbourne.

The VIA series has historically invested in office, residential and retail properties, relying on AEW’s team in the region to boost the value of acquired assets through redevelopment, repositioning, re-leasing and recapitalization.

Enlarging AEW’s Asia Pacific Portfolio

Since reaching the $1.12 billion final close on its third APAC value-add fund in June last year, the private equity firm has been involved in transactions worth more than $1.5 billion in the region, including nearly $1 billion in acquisitions this year.

Just over seven months ago, AEW’s VIA III strategy agreed to purchase Singapore’s Chevron House from a subsidiary of Oxley Holdings for S$1.025 billion (now $760 million), after the local developer had acquired the commercial complex in March 2018 for S$660 million.

In the same month that AEW struck that Singapore deal, APAC managing director David Schaefer and his team purchased a 27-storey office tower in Melbourne for A$200 million ($138 million). That Aussie acquisition followed AEW’s November 2018 buy of 19 Harris Street in Sydney for A$143 million.

Adopting the JV Route in China

The US investment manager has also been active in China, racking up a pair of joint venture purchases worth a combined RMB 7.25 billion ($1 billion) over the past twelve months.

In January, the firm formed a 50:50 JV with Singapore property giant CapitaLand to acquire 70 percent of the Pufa Tower in Shanghai from a vehicle controlled by HNA Group for RMB 2.75 billion.

A month before that deal, AEW formed an 85:15 joint venture with Beijing-based private equity investor Hony Capital to purchase a 21-storey office tower in China’s capital from Hong Kong-listed Hopson Development for RMB 4.5 billion.