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AEW Asia targets $750m for Fund III – Exclusive

The Asia-focused division of real estate investment management firm AEW Capital Management is expected to hit the fundraising trail in Q2.

AEW Asia, the Asia-focused division of real estate investment management firm AEW Capital Management, is about to hit the fundraising trail for its third pan-Asia fund, PERE has learned.

AEW Value Investors Asia III has a $750 million target, significantly more than the $590 million corralled by the firm for its predecessor, which held a final closing in May 2016.

The new fund is being prepared ahead of a launch in Q2 now that AEW Value Investors Asia II is almost fully invested. The second fund has been deployed into office and retail assets in the region’s major cities of Seoul, Shanghai, Hong Kong, Singapore and Sydney, and sources with knowledge of the matter say there is room for one more outlay before the vehicle’s corpus is fully deployed.

AEW Asia, which is led by former Citi Property Investors’ Asia head David Schaefer, runs a value-add strategy via the fund series with returns expected to be in 13-15 percent IRR range and a 1.5x-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 likely to be offered co-investment options once again. In addition to the $590 million collected for Fund II, the firm raised another $50 million in sidecar vehicles.

A successful raising by AEW Asia for Fund III would further ensconce Schaefer and his team at the firm after they replaced its first senior management in the region, led by Dutchman Peter Wittendorp, in 2012. They had left to form rival operation Silkroad Property Partners and have since similarly enjoyed capital support, closing on $445 million for maiden vehicle Silkroad Asia Value Partners in June 2016.

AEW Asia declined to comment.