PAG Raises $100M From Texas Teachers for Latest Asia Opportunistic Fund

PAG has secured a $100 million capital commitment from an existing limited partner, the Teacher Retirement System of Texas, for the Asian private equity firm’s latest opportunistic real estate fund.

The investment in PAG’s Secured Capital Real Estate Partners VIII was disclosed in a monthly update from TRS, a pension fund managing $187 billion in assets on behalf of public education workers in the second-biggest US state.

SCREP VIII, which has yet to be publicly announced, is the follow-up in the opportunistic fund family after SCREP VII reached a final closing of $2.75 billion just under four years ago. The 2020-vintage vehicle invests in high-yielding real estate projects across Asia, with a particular focus on commercial properties in Japan, where the fund managers of the Secured Capital series are based.

The TRS update indicated Europe as SCREP VIII’s target geography, but a PAG representative confirmed to Mingtiandi that the new fund will continue to focus on properties in Asia.

Return Engagement

TRS and another Texas pension fund, the Employees Retirement System, committed a combined $225 million to SCREP VII.

PAG had also received commitments from TRS in the amount of $10 million each for two 2022-vintage opportunistic real estate funds, Kona Co-Invest and Mirai Co-Invest. TRS continued to look abroad last year with a $125 million commitment to TPG Asia VIII, a regional buyout fund managed by Texas-based TPG Capital.

In early 2022, the Employees Retirement System announced a $50 million commitment to PAG’s third pan-Asian core-plus/value-add real estate fund. The pledge to PAG Real Estate Partners III was disclosed in January of that year by ERS, a $37 billion fund supporting Texas government workers.

Led by co-founder and chairman Weijian Shan, PAG hit a $1.9 billion final closing of its SCREP VI fund in 2017. That vehicle, which invests in property and distressed debt in Japan and selected markets, built on the success of SCREP V’s projected internal rates of return of more than 50 percent.

Targeting Wanda Malls

PAG made headlines last month when it announced that a creditor group it leads would reinvest in Zhuhai Wanda Commercial Management Group after the Chinese mall operator’s Hong Kong IPO failed to materialise.

PAG and the other pre-IPO investors are reinvesting an undisclosed sum in the mainland mall unit of Dalian Wanda, chaired by China’s once-richest man Wang Jianlin, with the proceeds redeemed from Wanda in accordance with their 2021 investment deal.

Under the terms of the agreement, Wang will see his stake in the company he built into China’s largest mall developer reduced from 78 percent to 40 percent, with the PAG-led investor consortium holding the remaining 60 percent.

PAG manages $55 billion in assets on behalf of nearly 300 global institutional investors.

Note: An earlier version of this story indicated that Broderick Storie manages PAG’s SCREP strategy. Storie is the manager of the firm’s PREP core-plus/value-add series. Mingtiandi regrets the error.