BlackRock Closes on $1.2B for Asia Property Fund V

The pile of capital aimed at Asian real estate opportunities has just grown by $1.175 billion as the largest asset manager in the US announced its latest funding milestone today.

BlackRock raised the cash for BlackRock Asia Property Fund V, a value-add strategy that has now reached its closing.

“The successful fundraise demonstrates the strong confidence and trust our investors have placed in the investment capabilities and value offered by BlackRock,” said John Saunders, head of BlackRock Asia Pacific Real Estate.

The New York-based firm, which managed over $60 billion in real assets as of 31 December 2020, revealed the closing on the investment vehicle less than two years after it was first known to have begun raising funds.

Outperforming in a Pandemic

Despite the crimps on travel created by the COVID-19 pandemic, BlackRock managed to exceed its original funding target of $1 billion by more than 17 percent, with the company pointing to support from established partners as contributing to the successful closing.

“This excellent outcome is particularly welcome, given the travel restrictions experienced in 2020 and the levels of volatility in public markets, especially during the first half of 2020,” Saunders said. He added that, “We are also extremely grateful for the re-up investments from our very loyal investor base, with whom we enjoy a close partnership.”

BlackRock’s fourth Asia fund, which closed on $500 million in 2017, had received capital commitments from the Employees’ Retirement System of Hawaii, the British Columbia Investment Management Corporation and 13 other investors.

Aiming to Add Value

BlackRock Asia Property Fund V aims to primarily generate returns from repositioning, rebuilding, re-leasing and recapitalizing real estate assets, with a primary focus on Japan, Australia, Singapore, China and Hong Kong, the company said.

Just last week BlackRock was reported to have sold a Singapore industrial asset to AEW for S$142 million ($107.3 million), with the company disposing of the project in Woodlands district at a 34 percent mark up over the price it paid to acquire the property in 2018.

“Our strategy remains tilted towards the conservative end of the value-add spectrum to build a portfolio of cash-generating assets offering a large spread between yield and funding costs,” Saunders said. “This has proven to be a very resilient strategy during 2020, during which we have seen rent collection, occupancy levels and leasing remaining very stable and consistently strong throughout the pandemic.”

One year ago BlackRock sold 2 Elizabeth Plaza in North Sydney to Singapore-based SC Capital Partners for A$127 million (then $83 million). A BlackRock fund had purchased that office asset for $81 million in 2017, according to sources who spoke with Mingtiandi at the time.

Piling into APAC

BlackRock’s closing for its latest Asia Pacific investment vehicle adds to the supply of investment capital targetting opportunities in the region, as the coronavirus has battered property values.

“Asia Pacific real estate continues to provide both growth and diversification potential for global investors, and we are very excited about the investment window ahead of us,” said Hamish MacDonald, head of investments for BlackRock Asia Pacific Real Estate.

Research by JLL late last year estimated that at the beginning of 2021 there would be $40 billion in dry powder allocated to real estate investments in Asia Pacific, with one of BlackRock’s competitors having added to that cache in the first month of the year.

Benett Theseira, who heads PGIM Real Estate for the region, told Mingtiandi in January that his firm was on the verge of closing on over $1 billion in equity for its latest Asia Pacific value-add fund.

PGIM is targetting many of the same geographic locations that appear on BlackRock’s map, with the Prudential affiliate focusing on opportunities in logistics, multi-family and data centres.

As BlackRock deploys its cash in Asia Pacific, it will be working under new supervision. In early February the company introduced Rachel Lord as its new chair for the region, with the seven-year company veteran set to take over from Geraldine Buckingham on 1 May.

Note: This story has been updated to show that BlackRock’s original target for its Asia Property Fund V was $1 billion. An earlier version had described the target as $1.1 billion. Mingtiandi regrets the error.