APG to grow club partner relationships in Asia

Netherlands-based APG's hiatus from blind pool commitments in Aisa could well continue as it continues to cement long-term partnerships with select co-investors and operators.

Daan van Aert, APG’s head of non-listed real estate for Asia told PERE that APG had not invested in a blind pool fund in Asia for more than two years. The pension fund investor has however focused significant resources towards investing more directly alongside small clubs of other large investors and typically one real estate operator, such as a developer.

PERE spoke to Van Aert as APG participated in the A$2.5 billion (€1.88 billion; $2.5 billion) joint purchase of ING Real Estate Investment Management’s Australian ING Industrial Fund. The transaction was agreed to in December and is expected to receive unit-holder approval imminently. Partners in that deal include the Canada Pension Plan Investment Board, China Investment Corporation and Sydney-based logistics developer and fund manager, Goodman Group.

“You are seeing that most of our deals are happening through club structures,” said van Aert, APG’s head of non-listed real estate for Asia. “That makes sense to us now, as we already have a large portfolio in the region.” APG has a already built a sizable exposure to both listed and unlisted Asia real estate securities since it started investing in Asia.

“We are trying to set up partnerships with the strongest parties in the real estate business,” explained Van Aert. “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.”

Van Aert admitted that blind pool investing could still feature in APG’s strategy going forward. “We haven’t yet made a commitment to a blind pool fund, [in the past two years] but that doesn’t mean we won’t.” He said, “We want to invest very selectively.”

Indeed weeks after his interview with PERE (see the February issue to read it in full), APG acquired a ‘substantial position’ in a Chinese development fund called the Harmony China Real Estate Fund and managed by a joint venture between China bank ICBC and developer China Overseas Land & Investment. While not a blind investment, the investment is an example of APG participating in a commingled, discretionary fund.

APG’s exposure to Asia real estate currently stands at approximately €4 billion, compared to €9.3 billion in Europe and €6.7 billion in the US. In 2007 it underlined its ambitions to expand in the region by opening an office in Hong Kong, currently operated by eight staff.