BPE Asia Real Estate has achieved a 24 percent internal rate of return – in US dollar terms and net of taxes – after being paid off for one of the largest real estate loans for a land development play in the Philippines.
The real estate investment division of Baring Private Equity Asia, one of Asia’s largest private equity firms, exited its investment in Global Gateway Logistics City (GGLC), a 177-hectare mixed-use park adjacent to the Clark International Airport, which is situated outside greater Metro Manila.
Alongside Hong Kong-based investment manager ADM Capital, BPE Asia Real Estate loaned $150 million for the land development project back in November 2015. The loan was placed against the project’s entire assets and used to both pay off an existing senior loan as well as provide capital to develop the park’s first two office buildings.
BPE Asia Real Estate and ADM have now been paid off through the sale of the entire park to a Philippine developer, which valued the park in excess of $750 million.
This is the third exit overall for BPE Asia Real Estate’s debut fund, for which it garnered $365 million back in 2015, and is the second exit in the Philippines, the first being the sale of Accralaw Tower in Manila at a 31 percent IRR (also net of tax and currency hedging) back in 2016.
Both of the Philippine exits showcase the firm’s debt and value-add focus, and also its development skill set and knowledge of the business process outsourcing (BPO) sector with the private equity arm owning BPO companies like Telus in the Philippines and Hexaware in India.
In an exclusive interview with PERE earlier in the year Jean Salata, chief executive and founding partner at Baring Private Equity Asia, said he encourages this cross-discipline integration.
“The real estate team is an integral part of everything we are doing and there are no silos. Sharing offices, one meeting, common investment committee members and quite a bit of working together on deals,” he said.
The two divisions have even co-invested alongside each other on a deal in Japan. They jointly invested more than $200 million in a Japanese retail business, a home improvement retailer with 15 large stores across metropolitan Tokyo.