Grosvenor tees up $500m Japan fund

The real estate investment and fund management firm, owned by the Duke of Westminster, is expected to begin fundraising for a $500 million Japanese core plus/value-added real estate fund by the middle of the summer.

Grosvenor, the London-based real estate investment and fund management business of the Duke of Westminster, is poised to start fundraising for its fourth Japan real estate fund.

The firm, led in Asia by chief executive Nicholas Loup, is aiming to raise up to $500 million for the vehicle. It will adopt a core plus to value-added strategy and is seeking IRRs of 13 percent to 15 percent.

Loup said: “This is what we would call a recovery fund because the Tokyo market was one of the most severely hit and consequently there is a good cyclical window of opportunity at the moment.”

“We will have our marketing materials ready the middle of the year,” he added. “We could be looking at two closings. The reason for that would be to get to the market quickly and start investing sooner rather than later.”

A successful fourth fundraise would bring Grosvenor’s total equity raised for fund investment in the country to more than $1 billion. Grosvenor Capital Advisors Partnership, a value-added/opportunistic residential fund and Grosvenor Diamond Capital – Stable Residential Fund, a residential core fund, each closed on $150 million in 2004 and 2005, respectively, while the Grosvenor Office Retail Fund, a core/value-added fund, closed on $300 million in 2007.

Grosvenor said in its 2009 annual report, released earlier this week, the fund was one of four new investment vehicles poised to be introduced to the market shortly. Also slated is a second London office fund, a Washington-focused development fund and third continental Europe fund.

The firm, which has a total of £10.2 billion (€11.7 billion; $15.7 billion) in assets under management, posted a group-wide loss of £235.8 million for the year, however its Asia business posted a positive return of 12.8 percent, against a group return of -2.3 percent.