New York-headquartered asset manager BlackRock has closed its BlackRock Asia Property Fund IV at a little over $500 million, sources familiar with the fundraising have confirmed to PERE.
The final closing, understood to have completed in September, brings to an end a long fundraising period for BlackRock’s first higher-returning real estate fund in Asia since it acquired MGPA in late 2013. According to SEC filings, the blind-pool commingled fund was incorporated in 2014.
At around $500 million, Fund IV has also been closed at half of the approximately $1 billion fundraising target set at the time of the fund launch, as per PERE’s earlier reporting. According to one source however, this was more of a hard cap target.
BlackRock declined to comment on the fundraising.
Investors that have committed to Fund IV include the $15 billion Employees’ Retirement System of the State of Hawaii, and the British Columbia Investment Management Corporation (bcIMC), the Canadian investment manager that manages more than $120 billion in assets on behalf of public sector pension plans, the Province of British Columbia, publicly administered trust funds and public bodies. The Employees’ Retirement System of the State of Hawaii committed around $50 million, PERE can confirm. bcIMC, whose exact commitment is not known, is a repeat investor, having invested in both the BlackRock Asia Property Fund II and Fund III, as per public filings.
PERE understands that the capital raising period for Fund IV was set to expire earlier in the year. However, around April, investors in the fund agreed to having the capital raising period extended for another six months.
In terms of deployment, part of the fund’s capital has already been invested in assets in Australia as well as China. These assets were acquired with repositioning strategies in mind.
PERE has further learned from one source that to avoid portfolio concentration risks, there is a clause in Fund IV’s marketing document that no more than 40 percent of the total equity will be deployed by BlackRock in one single market.
Back in 2008, MGPA, the private equity real estate firm, now part of BlackRock, had sparked controversy when it used S$2.97 billion of the $3.9 billion raised for predecessor Fund III into buying land for the Asia Square office towers development in Singapore.
BlackRock’s latest Asia opportunistic fundraise comes at a time when the capital raising landscape is witnessing a change in Asia. As one source remarked, a lot of the institutional investors which committed capital to the 2007-vintage vehicles have changed their model and now increasingly prefer investing via separately managed accounts or funds over limited partnerships.
As of June this year, BlackRock had $6 billion in real estate assets under management across Asia-Pacific. In addition to having an opportunistic strategy, BlackRock also operates a core strategy in the region and has acquired core assets in Australia and Japan in the past 18 months.