PAG Real Estate, the real estate business of Hong Kong-based alternative investments firm PAG, has raised almost all the money it targeted for its sixth real estate opportunity fund in just one closing, PERE can reveal.
According to sources familiar with the matter, the business has raised $1.2 billion of equity from institutional investors, against an ultimate target of $1.5 billion. The fund's hard cap, or permitted fundraising total, is $1.7 billion. PAG Real Estate declined to comment.
However, PERE understands that a further $300 million has been soft circled and is expected to officially close in the first quarter of 2017.
The vehicle was launched in January at a stage when its predecessor fund, Secured Capital Real Estate Partners (SCREP) V was as much as 90 percent deployed. That vehicle is thought to be completely invested now and PAG Real Estate is busy allocating capital from Fund VI. Indeed, according to PERE's sources, as much as $100 million from Fund VI has already been invested in Japanese distressed situations, a major strategy for the firm.
Japanese real estate deals are expected to feature heavily as the country represents something of a heartland for PAG Real Estate given many of its staff and networks are based in Tokyo. However, as much as 35 percent of the vehicle can be invested in other Asian property markets with China, Korea and Australia, markets in which the wider PAG firm has a presence, expected to feature over the course of the fund's investment period.
The $1.2 billion first closing represents another major fundraising triumph for PAG Real Estate and comes after the firm produced a target smashing performance on Fund V. At the time of Fund VI's launch, Fund V was projecting gross IRRs of more than 50 percent, well in excess of the 20 percent IRR target typically associated with opportunity property funds.
The first close also follows a $1.3 billion final closing for the firm's first core vehicle in June, $300 million more than the $1 billion original target PAG set the vehicle.