With more than 50 percent of its $625 million AG Asia Realty Fund II deployed, New York-based alternatives investment firm Angelo, Gordon & Co is gearing up to launch a third Asian private equity real estate fund early next year, PERE can reveal.
The firm closed the opportunistic Fund II in 2010, meeting its revised target. Since then, Angelo Gordon has been investing the vehicle’s capital in China residential, industrial, and retail development and Japanese assets, predominantly Tokyo offices. The firm is understood to be in the process of closing some large transactions, and expects to have Fund II more than 75 percent invested by the end of the year.
Fund III is still in the planning stages, and so its exact size has not yet been determined. However, PERE understands that the fund is likely to be larger than its predecessor, and the firm is expected to officially launch its fundraising efforts in Q1 2014.
For Fund III, Angelo Gordon is expected to target the same kind of limited partners as it attracted for Fund II, which mostly consist of institutional investors from all regions. It is understood that more than half of the capital of Angelo Gordon’s past funds have consisted of North American investors, while the rest have fairly evenly been divided between investors from Asia, Australia, Europe and the Middle East.
Angelo Gordon’s typical leverage on its Asian deals has been about 65 percent, which would give another $625 million fund purchasing power of about $1.8 billion.
Like Fund II, Fund III is expected to generate returns of 20 percent IRR.
Last year, Angelo Gordon closed two global real estate funds – AG Realty Fund VIII and AG Core Plus Realty Fund III – on $1.27 billion and $1 billion, respectively. Most recently, the firm also held a $130 million first close on its value-added Net Lease Realty Fund III in May. Since its founding in 1993, Angelo Gordon has acquired $13 billion of properties globally.
Angelo Gordon declined to comment.