Aviva, Secured Capital reach $300m for Tokyo recovery fund

The pair have closed on their jointly managed Tokyo Recovery Fund, having added $178 million since holding a first closing in November 2011.

Aviva Investors, the asset management business of London-based insurance firm, and Tokyo’s Secured Capital Investment Management have closed their jointly managed Tokyo Recovery Fund on $300 million of capital commitments, busting through the original target by $50 million.

Ian Hally, Aviva’s Asia-Pacific chief executive officer, said in a statement that the pair decided to hold a final close at $300 million for the oversubscribed offering because it was “optimal for the scale of market opportunities” in Tokyo. Final closing took place on 3 January, with four new incoming investors committing an additional $88 million to the vehicle.

The fund was established by Aviva Investors’ Singapore-based Asia-Pacific real estate team and Secured Capital in November 2011 with a core-plus investment strategy. It promises investors access to a portfolio of offices in prime locations in central Tokyo.

As PERE previously reported, Dutch pension fund asset manager PGGM was among the early investors to commit to the vehicle, hitherto described as a blind-pool club. The vehicle represents something of a fusion of traditional blind-pool funds, whereby investors commit their capital before they see any deals, and investment clubs, whereby the investors would have approval rights for investments, divestments and other major decisions.

The fundraising evolution shows steady progress. The first close came in November 2011 on $122 million, the second close arrived in July 2012 on $212 million and the final close took the fund to $300 million.

According to Aviva Investors’ Asia-Pacific Property Report in December, the Tokyo office market is near the bottom of the cycle. Tokyo in comparison with the rest of Japan still looks attractive with “bustling economic activity” in the city, the country’s earthquake rebuilding, Bank of Japan’s recent increase in the size of its asset-purchase programme and the incoming Prime Minister Shinzo Abe’s push for greater monetary stimulus, the report said.  

Naoya Nakata, managing director at Secured Capital, said it has already demonstrated the value of its strategy by acquiring Meguro Place Tower and Shibuya Glass City in October. “We are confident that current market and economic conditions mean similar quality opportunities exist in Tokyo’s commercial real estate market,” he added.