PAG, the Asia-focused investment management firm, has acquired an approximately $1 billion property portfolio from GE Capital Japan’s real estate holdings.
The firm has purchased the assets via PAG Real Estate Partners (PREP), a pan-Asia core-plus real estate fund for which PAG is seeking to raise $1 billion.
PAG, which merged with the Japan-focused private equity real estate firm Secured Capital in 2011, did not disclose the purchase price of the portfolio, which comprises 26 high-quality properties, predominantly office buildings in Tokyo.
“This portfolio acquisition sits squarely within the strategy’s [PREP] objectives and provides an attractive income-driven return profile for our investors in one of Asia’s more compelling core markets,” said Broderick Storie, partner, PAG.
PREP was launched in March 2014, and PAG is understood to have raised $400 million via the first close in April this year, according to PERE sources. The capital raised is to be invested in core assets with strong cash flow across nine gateway cities in Asia, with a focus on the markets where PAG has already demonstrated its capabilities, namely Japan, China and Australia. The firm is also believed to be expecting net returns of 10 percent to 14 percent from the vehicle.
With the latest portfolio sale, GE Capital, the financial arm of the US conglomerate GE, has taken one step further towards winding up its real estate portfolio in the region, led by a global strategy of reducing its equity real estate investments to focus on building a real estate debt platform. In November last year, it sold its entire residential portfolio in Japan, consisting of more than 200 properties across the country, to The Blackstone Group for over ¥190 billion (€1.3 billion; $1.5 billion)
The New York-based private equity behemoth, together with the San Francisco-based bank Wells Fargo, also acquired most of GE Capital’s real estate assets in the US and Europe for approximately $23 billion earlier this year in April, in what was one of the biggest property transactions since the global financial crisis.