AEW expands investor base with latest Asia value-add fund

The US real estate investment firm has attracted Asian capital for the first time in the 13-year history of the fund series.

Boston-headquartered real estate investment manager AEW has raised $1.54 billion for its biggest Asia-focused private real estate fund after adding logistics and multifamily investments to its deployment strategy.

PERE can reveal that this is the first time the firm has received commitments from Asian investors in its Asia value-add fund series since its launch in 2008. Among a total of 18 investors, there are at least two new Asian investors in AEW Value Investors Asia IV.

Apart from the new investors, which also included four German groups, the firm continued to see strong support from its existing limited partners in its latest fundraise. With more than 80 percent of the committed capital coming from investors in its predecessor fund AEW Value Investors Asia III, Fund IV surpassed the original target of $1.2 billion.

With Fund IV, the firm had a 100 percent re-up rate from the 10 investors who backed both Fund II and Fund III, according to sources close to the situation. Those follow-on investors include the California State Teachers’ Retirement System and the Teacher Retirement System of Texas. Launched at the end of 2019, the fund also benefited from pandemic-related travel restrictions, which led many investors to rely on strong existing manager relationships for new commitments, PERE understands.

“This result not only reflects a sustained interest in institutional real estate in Asia-Pacific among investors, but also shows confidence in AEW’s execution in implementing a targeted value-add strategy,” said David Schaefer, CEO Asia-Pacific for AEW.

AEW declined to comment on performance. Typically, value-add funds are expected to generate low to mid-teen IRRs and equity multiples of around 1.5x.

With Fund IV, AEW has broadened the investment mandate to include logistics and multifamily, whereas its predecessor is understood to have focused primarily in offices.

To date, the fund is approximately 30 percent invested in four investments, including logistics and mixed-use office assets in Beijing, Melbourne, Seoul and Singapore. “With a robust pipeline of investments that are under exclusivity already in Tokyo multifamily, Hong Kong industrial office and Seoul logistics, we expect the fund to be close to 50 percent committed by year end,” said Jason Lee, Asia-Pacific chief investment officer for AEW and Fund IV’s senior portfolio manager.

Since 2008, AEW Asia has raised $3.87 billion across the four funds in its Asia value-add series. Under Schaefer’s leadership, the firm’s Asia team has grown from 12 people in 2012 to 42 people today.