AEW Asia’s first fund is fully exited

AEW’s Value Investors Asia fund has been exited of all of its assets and has achieved a 13 percent IRR overall. The firm is currently capital raising for a second Pan-Asia fund.

The first Asia-focused fund of global real estate fund manager AEW Global has been fully-exited and the firm has achieved a net IRR north of 13 percent and an equity multiple of 1.42x for it, PERE can reveal.

The returns for AEW Value Investors Asia, which was raised as the global financial crisis took hold in 2008 and which attracted $558 million, are understood to be among the highest generated by funds of its vintage.

The vehicle wound up following its final exit at the end of April of a mixed-used commercial property at 2 Havelock Road in Singapore to domestic real estate conglomerate and developer Guthrie GTS for around $280 million, according to local media reports. The firm bought the 173,912 square foot property for $205 million in 2007.

In all, the fund held 11 investments, bought using leverage at an average of 50 percent loan to value.

Its strategy involved a focus on a value-add investments in Shanghai, Hong Kong, Singapore, Seoul, and Taipei, only in commercial properties such as office and retail.  Its investments were redeveloped, repositioned, re-leased and recapitalized opportunities, often involving AEW taking controlling stakes.

Overlapping with the final exits from the firm’s first fund, and coinciding with a change of senior management, AEW has launched a second vehicle entitled AEW Value Investors Asia II. For that fund the firm is targeting $500 million. This fund is understood to have a target IRR of between 13 percent and 15 percent, and is expected to invest using a leverage cap again at 50 percent.

Investors in the first fund included large European institutions such as The Third Swedish National Pension Fund and Finnish insurance company Ilmarinen Mutual Pension Insurance, according to PERE’s Research and Analytics division. While Fund I had no Asian investors, AEW is understood to be targeting some Asian investors for Fund II.

AEW’s Asia platform last year hired a trio of new leaders from DTZ Investment Management, led by industry veteran David Schaefer. Just before that in the summer of 2012, former AEW Asia head Peter Wittendorp and his senior team left the firm to set up a boutique firm called SilkRoad Property Partners.

Before joining AEW, Schaefer tried to raise a $400 million vehicle called Aveny Asia Real Estate Partners to invest opportunistically in Asia’s gateway cities for DTZ. While the fundraising environment and DTZ’s change in ownership impaired his efforts, AEW saw potential in the strategy and decided to adopt some of its characteristics for Fund II, PERE reported earlier.

AEW Asia’s various platforms currently have $2 billion in assets under management, a small portion of the firm’s $45 billion of assets worldwide.