ASIA NEWS: Takeover in reverse

DTZ might have parted ways with DTZ Capital Partners, its fledgling real estate investment management business in Asia, but the global property services firm still has designs on the region. That was the message from Robert Shibuya, the California-based group president of UGL, a Sydney-based engineering, property services, asset management and maintenance firm that took over the London-based property agent in December. 

“In particular, one of the areas we were very interested in when making the investment [in DTZ] was its investment and asset management business,” Shibuya told PERE shortly after we revealed its four-strong Asia real estate investment management business had spun out to become a boutique platform called Bay Capital Partners. “The business lines in Europe have performed very well and made a strong contribution during the last 12 [months].  The situation in Asia was different because that was a start-up to create a maiden fund, which was initiated prior to us acquiring the company.”

Blaming poor capital-raising conditions over the preceding months, Shibuya, UGL and DTZ’s other senior executives, agreed to part ways with David Schaefer, the platform’s head, at the end of August. Still, DTZ wants a strong real estate investment management presence in Asia to complement its longer-standing European platform.

Having visited Asia more than five times in the past year, Shibuya said the message he repeatedly heard during his travels was that institutional capital eventually will flow back into Asian real estate investment vehicles and established platforms would be the major recipients, not first-time funds. “Obviously, from an investor’s standpoint, they represent less risk,” he added. 

So how will DTZ grow in Asia if not organically? While not forthcoming on the subject, Shibuya intimated that acquisitions would be considered. 

“DTZ’s CEO Richard Leupen and I have been delivering the message that we are committed to the investment management business, regard it as one of the core service lines and believe there is a great opportunity to expand that business beyond Europe,” Shibuya said. “We don’t know exactly how it will happen, but we’re going to look at strategic alternatives. It is likely that what we do will involve a strategy that is part of an existing platform rather than a maiden platform.”

In the meantime, Bay Capital is expected to re-launch its ‘maiden’ fund in due course, albeit using a different name. Originally called Aveny Asia Real Estate Partners, the commingled fund was expected to corral $400 million for investments made across Asia’s gateway cities of Hong Kong, Taipei, Seoul, Beijing, Shanghai and Singapore. Schaefer declined to comment, but PERE understands that, as of press time, the vehicle was expected to resemble the first effort in both size and strategy.

When the fund was launched at the end of 2010, uncertainty surrounding DTZ’s corporate future undermined its capital-raising efforts. Following the takeover a year later, a general malaise in capital-raising dissuaded the new sponsor to continue its support. Now, under the stewardship of Bay Capital, perhaps it will be third-time lucky. 

DTZ, meanwhile, will be looking for something better established for the region.