Mapletree JV cuts second fundraising short

To reflect a change in strategy, the Singapore-based property firm and its Malaysian partner have decided to hold a final closing on their second property fund at just MYR140 million, well short of its original MYR1 billion target set seven years ago.

CIMB-Mapletree Management, a Malaysia-focused joint venture between Singapore-based, developer and fund manager Mapletree Investments and Malaysia’s second largest financial services provider CIMB Group, is expected to hold a final close on its second property fund in a month on approximately MYR140 million (€35 million; $44 million), having decided to not raise any further capital from its first close last year, PERE can reveal.

The vehicle, called CMREF 2 Shariah, is believed to be the first Shariah-compliant private equity real estate fund raised exclusively for Malaysian property. The Shariah aspects of the fund are being advised on by CIMB Islamic Bank.

Ismail Ani Arope, director of CIMB-Mapletree, investors have indicated a preference for participating in the fund’s deals through co-investment instead of investing through the vehicle itself.

However, including leverage and co-investment capital, CMREF 2 Shariah is expected to still have purchasing power of up to MYR600 million.

CIMB-Mapletree, originally launched CMREF 2 in 2007 as a development fund with an MYR1 billion target. However, following the global financial crisis the firm pulled back to focus on its Fund I investments, Arope told PERE. That fund closed on MYR402 million of commitments in 2006.

CMREF 2 was not re-launched until the end of 2011, at which time CIMB-Mapletree did not specify a target size. The firm held a first close on MYR140 million in July of last year. The mandate is now focused on core and income-producing assets in Malaysia, with an up to 30 percent allocation to development, Arope said, and a return target of around 10 percent.

CIMB-Mapletree is currently in due diligence on several deals for CMREF 2 and is expected to close some of these in the next few months. The firm has also exited 9 of CMREF 1’s 13 investments with some IRRs as high as 50 percent, Arope added, and recently completed a neighborhood mall redevelopment project.