CBRE raises $250m for pre-specified Asia multi manager fund

The multi-manager business of CBRE Global Investors has stepped away from the traditional fund of funds model as it raises $250 million for an Asia-focused investment vehicle. The Asia Alpha Plus Fund II has a completely pre-specified investment strategy that includes no fresh equity commitments to new underlying funds.

CBRE Global Multi Manager, the multi manager division of CBRE Global Investors, has raised $250 million for its second Asia-focused investment vehicle.

The Asia Alpha Plus Fund II (AAPFII) is understood to have gained traction with approximately five large institutional investors thanks partly to offering a completely pre-identified portfolio of investments which is not expected to include equity commitments to underlying commingled funds.

This is something of a departure for real estate multi-manager platforms which have traditionally raised fund of funds – essentially commingled funds which make investments in a selection of underlying commingled funds.

As institutional real estate investors have become more sophisticated and less willing to make blind fund commitments, many multi-managers have evolved their fund offerings to include more seed investments. By offering a pre-identified pipeline of deals, the fund manager is also able to put investor capital to work quicker as conducting due diligence in underlying funds can be time consuming.

However, in raising capital around a vehicle that is completely pre-seeded with existing investments CBRE Global Multi-Manager becomes among the first platforms in the sector to have no blind component whatsoever, although other multi-managers such as Composition Capital and Franklin Templeton have also been increasing the seeded component of their vehicles of late.

It is understood that AAPFII, which could see its capital haul increase ultimately to $300 million, has already completed five investments. These consist of club investments, co-investments and secondaries investments. CBRE is expecting to generate IRRs of 15 percent net of fee and taxes through the vehicle.

For its previous Asia multi-manager fund, Asia Alpha Plus Fund, which was closed on $269 million in July last year, CBRE made 10 investments comprising four fresh commitments to new funds and six secondaries investments. That fund is seeking net IRRs of 13 percent to 15 percent and is understood to be close to exiting from certain deals as they are understood to have already reached 2x equity.

CBRE Global Multi Manager refused to comment on its fundraising efforts but Jeremy Plummer, head of the division, which accounts for $12.3 billion of CBRE Global Investors’ $94.8 billion of assets under management, told PERE in a feature published this week: “What we are doing is replacing what used to be known as an ‘allocator opportunity fund’ with two key differences – significantly lower leverage and very much lower fees.”

Plummer said that as a result, the traditional fund of funds sector is experiencing something of an identity challenge as the more direct investing strategy required a “big difference in skill sets”. He said: “We need to be able to assess the actual real estate assets we are investing in and get comfortable with that as opposed to the fund of funds model of three of four years ago which was more about passively committing capital to a fund and letting the manager do what he likes.”