MGPA raises largest Asia fund ever

The London-based real estate investment firm has closed its latest Asia real estate fund, MGPA Asia III, on $3.9bn. Combined with the firm’s latest European vehicle, which also closed today on $1.3bn, MGPA has secured $5.2bn in capital commitments for its latest offering.

MGPA has closed the largest dedicated private equity real estate Asia fund ever on $3.9 billion (€2.5 billion).

The fund, MGPA Asia Fund III, closed today with more than two-thirds of previous investors recommitting to the firm, including some of the world’s largest sovereign wealth funds.

Combined with MGPA’s latest Europe fund, MGPA Europe Fund III, which also closed today on $1.3 billion (€842 million), the real estate firm has raised a total of $5.2 billion. The two funds, which operate as separate vehicles, are collectively known as MGPA Fund III.

The news indicates that investors remain keen on Asia-focused offerings. Los Angeles-based Colony Capital has raised $4 billion for its eighth global opportunistic fund, Colony Investors VIII, most of which is also earmarked for Asia. 

Speaking to PERE, Alex Jeffrey, chief executive of Europe at MGPA, said with leverage the funds would target up to $20 billion worth of deals.

With “significant growth” in Asia, Jeffrey said MGPA would invest in the office, residential and hotel sectors in countries such as China, Japan and Singapore. The European fund, according to Jeffrey, will take advantage of middle-class growth in Central and Eastern European countries as well as mispriced assets in more mature markets.

Western Europe, Jeffrey went on, offered opportunities for “value” as opposed to growth investment. He said: “If you can move quickly, the emerging [market] dislocation, and even distress, means you can pick up assets at below true value.”

MGPA closed its previous Asia and Europe funds, known as MGP Fund II, on $1.3 billion in 2005, two-thirds of which was invested towards Asian investments.

Jeffrey said both vehicles within MGPA Fund III, which attracted 65 investors in total, would be fully committed within three years, and have a lifespan of nine. Leverage would be 60 to 65 percent, and a maximum of 75 percent, he said.

Jim Quille, MGPA chairman and chief executive officer, added in a statement market conditions were helping the firm by ensuring less competition for deals, “especially where high levels of leverage and financial engineering were driving certain buyers. Unless you can create real value through physically improving, developing or active asset management of real estate today, opportunities are less obvious.”

For more information on the fund, read next month's issue of PERE magazine.