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AEW Asia makes $226m Shanghai play

The investment manager’s acquisition of the Innov Tower is the final investment from its second pan-Asian value-add fund.

AEW Asia, the Asia-focused division of real estate investment management firm AEW Capital Management, has acquired the Innov Tower in Shanghai for $226 million.

Innov Tower is a 23-story Grade A office building totaling approximately 435,000 square feet. The property is located within a two-minute walk to the nearest metro station that provides convenient access to the downtown core CBD area as well as other transportation and commercial hubs.

“We believe that Innov Tower is one of the best quality office buildings in the Caohejing business park and expect that there will continue to be strong occupier interest from both domestic and multinational firms,” commented David Schaefer, managing director and head of Asia Pacific at AEW.

“With current in-place rents at Innov Tower below market rates, we anticipate that there will be a positive rental reversion opportunity when leases begin to expire,” he added.

The deal is the 11th and final investment from the firm’s AEW Value Investors Asia II fund, its second pan-Asia value-added fund. The firm held a final closing in May 2016 having corralled $590 million for the fund and another $50 million in sidecar vehicles.

PERE reported in March that AEW Asia was about to hit the fundraising trail with the AEW Value Investors Asia III, setting a $750 million target.

Again, AEW will look to run a value-add strategy via the fund series with returns expected to be in 13 percent to 15 percent IRR range and a 1.5x to 1.8x equity multiple. Like its predecessor, AEW Value Investors Asia III is expected to be meaningfully capitalized by European institutions, although investors from other regions are expected to commit capital too. Participants are also likely to be offered co-investment options..

AEW globally manages $64.4 billion in assets, with $33.3 billion in the US; $29.1 billion in Europe; and $2 billion in Asia.