ASIA NEWS: When time is up

Investor sentiment for private real estate investment funds in Asia is on the rise. Last month’s survey by the Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV), which showed that 82 percent of investors polled expect to increase their allocations to the region, was testament to that.

Nonetheless, for those private equity real estate firms coming to the end of their capital-raising period, when time is up, it’s up. At least that was the attitude taken last month by Pamfleet Group, the Hong Kong- and Singapore-based firm formed through a management buyout of Jardine Fleming’s direct property fund management business in 2000.

After a decade of completing investments on a deal-by-deal basis, Pamfleet held a final closing of $209 million for its first blind-pool, commingled opportunity fund. Shy of its original $330 million target, chief executive officer Andrew Moore was nonetheless sure that no further capital would be sought – even for co-investment or side-car vehicles – now that the fundraising period for the Pamfleet Real Estate Fund had expired.

“Eventually you have to say: this is a blind-pool, commingled fund, and either you’re in it or you’re not,” Moore told PERE shortly after the closing. For the seven investors that did back the firm, they will now witness Moore and Pamfleet concentrating solely on the task in hand – investing their capital over a three-year period, typically in Class B commercial properties  that offer value-added and repositioning opportunities.

During Pamfleet’s two-year fundraising period, investor sentiment for private equity real estate funds in general, as well as Hong Kong and Singapore real estate itself, has ebbed and flowed. Characteristically, however, the firm’s strategy has remained consistent throughout.

“There’s been absolutely no change, nor would we envisage any change, in our thesis,” Moore said. “We’re still very much about acquiring non-performing real estate assets with opportunities for upgrading and repositioning them, typically with significant amounts of renovation work.”

In terms of why Pamfleet failed to reach its fundraising target of $330 million, Moore noted that the firm detected a negative swing in sentiment towards the middle of 2011, due to the uncertainty surrounding the Eurozone’s sovereign debt crisis. With an international base of prospective investors – those LPs that did commit capital included pension funds, insurance companies and fund of funds – there was a bit of a wait-and-see approach, he said. In addition, for those investors that remained engaged, their decision-making processes were taking longer than usual, he added.

In line with the findings of ANREV’s survey, a pick-up of sentiment was detected by Moore towards the end of the year. “People realised the world was stilling turning on its axis,” he said. However, that was mere months before Pamfleet’s capital-raising period came to a close. When time was up, the firm determined its efforts were best focused on putting the capital it had corralled to work instead continue the hunt for more.