Hong Kong-based alternative investment manager PAG has reportedly raised over $1 billion for a new pan-Asia fund focusing on core-plus real estate assets.
The PAG Real Estate Partners fund, which held a first closing in recent weeks, now expects to conduct a final closing in June of this year, according to an account in private equity industry trade journal PERE.
The alternative investment house, which is headed by former TPG executive Shan Weijian, is targetting a total of $1.2 billion in capital for the new fund. The investment vehicle is set to be managed by PAG partner Broderick Storie under the firm’s PAG Real Estate division, according to sources familiar with the matter.
PAG Real Estate Partners Fund will be focussing on property investment opportunities in China, Japan and Australia, according to sources who spoke with Mingtiandi, and is expecting net returns of between 10 to 13 percent for its investors.
Core-plus vehicles such as this one usually look for high value assets in key urban locations, but are willing to take on greater risk than pure core funds, typically by investing in renovation of buildings or choosing fringe locations that are expected to develop core status, in favor of gaining a higher investment return.
Real Estate Fund Follows $3.6 Bil Buyout Fund
PAG’s real estate fund milestone follows soon after the PE firm, which formerly was known as Pacific Alliance Group, announced the closing of its PAG Asia II LP fund in January, after raising a total of $3.6 billion in capital.
That fund, the firm’s second pan-Asia private equity buyout vehicle held just a single closing in mid-December, after reportedly being oversubscribed. In total, the company now says it has over $15 billion in capital under management across its private equity, real estate and absolute return vehicles.
Buying $1B GE Portfolio
Even before this initial closing, the PAG Real Estate Partners fund already began deploying cash last year, with the acquisition of a $1 billion Japanese property portfolio from GE Japan, which was exiting its property business.
The GE deal, which netted a set of 26 commercial assets, primarily office buildings, gave the fund a presence in some of the key commercial hubs in Japan, China and Australia, as well as in Seoul, Hong Kong and Singapore.