Sniper Capital, the Hong Kong-based fund management business focused on Macau, is aiming to raise $100 million for its first private closed-ended real estate fund.
The Macau Sniper Fund has been set up to invest in food and beverage-related leisure real estate on the former Portuguese colony, now Asia’s largest gaming destination.
The fund is to purchase freehold residential assets for a typical acquisition price of between $1 million to $2 million and change the use of the assets to leisure.
It has been structured as a five-year closed-ended fund with an option of a one year extension and Sniper is targeting IRRs of more than 25 percent from its investments.
According to Sniper director Tom Ashworth, the firm is expecting to hold a final closing for the vehicle by the end of the year. The management has committed $5 million as seed equity and aims to attract small institutional investors, high net worth individuals, private banks and sovereign wealth funds.
He told PERE: “This fund is focussed on emerging areas of Macau and not its mainstream areas. We are talking about areas just off-prime but where there is still significant value.”
According to government statistics, 82 percent of Macau’s economy is driven by gaming. Ashworth said: “That number is one the government is looking to diversify and that plays into this fund’s mandate. It is the non-gaming element of Macau that will drive its next phase.”
The fund has identified a pipeline of 55 properties valued at $85 million and has already purchased six assets and converted their use.
Ashworth said leverage would be deployed at up to 30 percent loan to value for the reconstruction of the assets it buys, however it would look to increase that gearing to 50 percent once the properties are income producing.
Sniper Capital currently manages the London-listed Macau Properties Opportunities Fund which recently listed on the senior market having resided on London’s junior Alternative Investment Market since its initial public offering in June 2006. That vehicle is focused on larger investments including residential and commercial assets.