PAG Achieves $2.75B Final Close for Latest Asia Opportunistic Fund

Hong Kong-based investment manager PAG has achieved a final close of $2.75 billion in investor commitments for its latest opportunistic Asia real estate investment vehicle, exceeding the fund’s $2 billion minimum target by more than one third, Mingtiandi has come to understand.

The fund manager’s real estate division has completed the financing for Secured Capital Real Estate Partners VII (SCREP VII) nine months after launching the closed-ended fund, Mingtiandi has confirmed with a source familiar with PAG’s latest campaign. News of the milestone was first reported this week by industry publication PERE.

Like its predecessors, SCREP VII is aiming to invest in high-yielding real estate projects across Asia, with a particular focus on commercial real estate in Japan, where the managers of the Secured Capital series are based.

Targeting North Asia

Having reached a first close of $2.5 billion by the end of 2019, SCREP VII brought home signatures worth a further $275 million this year, according to a source who spoke to Mingtiandi.

Although PAG has yet to make a public statement regarding the fund, the firm’s managing partner and group president of real estate, Jon-Paul Toppino, is reported to be releasing a statement next week saying that he remains confident that “Asia and Japan in particular represent attractive long-term opportunities”, according to the PERE account.

With the firm having gathered most of its commitments prior to the spread of the coronavirus, the uncertainty which has afflicted the global economy in recent weeks is said not to have had an effect on the fund raise.

The Hong Kong investment manager was previously reported to be planning to deploy up to 60 percent of SCREP VII in Japan – while aiming the remainder of the capital at South Korea and China, and it is understood that the company has not altered its planned allocations as a result of the pandemic.

PAG’s fundraising milestone comes two and a half years after the firm led by Weijian Shan achieved a final close of $1.9 billion for SCREP VI, which also surpassed its initial target.

New Fund Draws Repeat Customers

Two-thirds of the investors subscribing to SCREP VII are said to previously backed earlier PAG funds, with pension funds, sovereign wealth vehicles, and university endowments from North America, Europe and Asia taking part.

The Employees Retirement System of Texas and Teacher Retirement System of Texas have committed a combined $225 million to the fund, according to publicly available information cited by PERE.

Amsterdam-based fund manager Bouwinvest Real Estate Investors said last July that it had invested $100 million with PAG in Asia, although at least part of that funding has been channeled through the firm’s pan-Asian core-plus strategy, PREP II.

The Canadian Pension Plan Investment Board has been another backer of PAG initiatives, with Mingtiandi having previously revealed that the pension fund had taken an anchor stake in SCREP VI.

Targeting 20% Returns on Deployed Fund

PAG Real Estate’s SCREP VI fund allocated approximately 65 percent of its capital to opportunistic property investments and distressed debt in Japan and, having already exited 10 percent of its investments, is said to be targeting returns in excess of 20 percent.

Among PAG’s recent Japan divestments was its $140 million sale just over a month ago of a portfolio of multifamily assets in Tokyo and Osaka to an open-ended fund managed by Nuveen, according to a source close to the deal who spoke to Mingtiandi.