KK daVinci plans fifth opportunity fund, writes down assets

Japanese private equity real estate firm KK daVinci sees its equity raising plans and the value of its assets under management hit by worsening market conditions in Japan.

KK daVinci, the Japanese private equity real estate firm, is downsizing its equity target for its latest Asia vehicle.

The Tokyo-based firm cited deteriorating market conditions in Japan and asset write downs as reasons behind the move to reduce the ¥400 billion ($4.36 billion; €3.4 billion) target equity for its incoming Real Estate Opportunity Fund V to ¥76 billion.

KK daVinci told investors of the plan in its 2008 full year results released on Friday. It said it had corralled ¥76 billion of committed capital from overseas and domestic investors and that the sum raised reflected “the current market condition and the opportunity size.”

It also said it would start investing the equity from next month. “The purpose of commencing the new fund at the current situation is to establish and prepare an investment platform in order to accommodate sudden improvements in market conditions,” it added.

The firm has suffered write downs on the value of its assets under management by ¥50.5 billion based on a consolidated basis.
It did not state the resultant value of its current asset portfolio. However the firm is understood to have more than $10 billion of real estate – both listed and unlisted securities.

The firm said: “In view of the distressed real estate market today, total amounts of acquisitions and dispositions of assets will be smaller during this fiscal year. As a result we expect a ¥300 million surplus net profit for the fiscal year of 2009. We have decided not to estimate future earnings at this time, rather, we plan to announce a three year plan when the investment environment normalises.”

Past KK daVinci fund closures include ¥320 billion for its fourth fund which closed in March 2006 and ¥100 billion for its third fund which closed in November 2004.