APG increases China resi exposure through fund investment

Netherlands-based Algemene Pensioen Groep (APG) has taken a ‘substantial’ position in a Chinese residential development fund.

The pension fund investor, which has more than €265 billion of capital under management, made the investment into the Harmony China Real Estate Fund, a five-year, closed-ended opportunity fund jointly managed by China bank ICBC and developer China Overseas Land & Investment.

ICBC described APG as “an important strategic investment partner” in an announcement on the deal. The bank said: “APG brings a wealth of global institutional real estate knowledge to Harmony China.”

The fund was closed on $286 million last April and most of its capital has been invested in interests in three projects in China, in Xi’an, Qingdao and Shenyang. The investors in the fund are high net worth clients of ICBC bank and the joint sponsors. APG has acquired its stake out of the sponsors’ capital positions.

PERE interviewed Daan van Aert, APG’s head of non-listed real estate, Asia, for the forthcoming issue of PERE magazine. In the interview Van Aert said the pension fund investor was keen to develop long-term relationships with select investment and operational partners, particularly via club structures although he did not rule out participating in opportunity funds.

In the interview, he said: “We are trying to set up partnerships with the strongest parties in the real estate business. That enables us to focus substantial amounts of capital for the long term as well as obtain favourable terms and conditions. The structures we favour typically involve a combination of a dedicated manager, say an operator or developer, together with two or three like-minded investors.”

He said APG’s exposure to Asia was focused approximately 75 percent on core markets but that there was increasing scope now to supplement its core investments with more opportunistic outlays.

The next issue of PERE is out in the first week of February.