BlackRock Raises Additional $52.9M for Fifth Asia Real Estate Fund

BlackRock last week disclosed an additional capital raise for its fifth Asia real estate fund, positioning the asset management giant to gain from a recovery in the regional economy once the COVID-19 crisis fades into the background.

In a filing with the US Securities and Exchange Commission on 8 December, BlackRock said it had raised an additional $52.9 million for its Asia Property Fund V, a value-add vehicle set up last year to invest in commercial real estate assets in Australia, Japan, Singapore, China and Hong Kong.

“We expect persistent inflows to Asian assets as many global investors remain underinvested and China’s weight in global indexes grows,” BlackRock said in its 2021 global outlook released earlier this month.

Pushing Past $500M

BlackRock did not reveal a target amount for the fifth fund, but media reports in January of this year said the New York-based asset manager had raised $500 million in an initial closing. Asia Property Fund IV, the predecessor to this latest initiative, closed in 2017 after a raise of $500 million, well short of the $1 billion targeted at the fund’s launch in 2014.

Although BlackRock has not disclosed the investors in Asia Property Fund V, PERE reported in January that the fund’s first close consisted largely of return engagements with existing European and North American investors.

The fourth fund had received capital commitments from the Employees’ Retirement System of Hawaii, the British Columbia Investment Management Corporation and 13 other investors.

According to the SEC filing for Asia Property Fund V, the minimum investment accepted from any outside investor is $50,000.

Wading Through a Pricing Reset

In April of this year, when the impact of the coronavirus pandemic was already clear, BlackRock’s regional leadership indicated that 2020 would be a year of adjustment for Asia Pacific property markets, which could bring the chance for better deals.

“In the middle of a concerted pricing reset, I am quite confident that there will be no shortage of opportunities in the APAC region,” BlackRock’s head of real estate for Asia, John Saunders, said in a company webcast.

With an eye to achieving returns for investors in the company’s open-ended funds, Saunders added: “Specifically, assets with good, stable, recurring incomes reduce a lot of vacancy risks, especially during periods of weaker demand as we are seeing now.” At the time, Saunders indicated that “markets like offices in Australia and Japan and industrial in Singapore continue to deliver the most pipeline potential”.

Blurred Lines

In its 2021 outlook, BlackRock noted a blurring of the lines between developed and emerging markets, with the COVID-19 pandemic playing a role. “China and some other Asian countries have largely contained the virus — and are further ahead in the restart,” the report said. “This underpins our preference for Asia ex-Japan equities.”

The asset manager said the early results of COVID-19 vaccine trials suggest that “the economic restart can re-accelerate significantly in 2021 as pent-up demand is unleashed”.

Mostly quiet in Asia during COVID-hit 2020, BlackRock stirred in October when its BlackRock Real Assets arm agreed to acquire a majority stake in Taiwanese solar operator New Green Power for an undisclosed sum.