Six years after launching its operations in Asia, the Chicago-based real estate investment firm Heitman is finally coming to the market with its debut fund in the region.
In early November this year, PERE revealed how the firm is preparing the launch of Heitman Asia-Pacific Property Partners (HAPI), a close-ended pan-Asia fund with a value-add strategy. Though Heitman declined to comment on the fundraising, it is understood that $500 million in equity is being targeted for the vehicle, to be officially launched in early 2015. All asset classes, including specialty sectors such as self-storage, student housing and senior care accommodation will be considered for deployment of capital. CBRE Capital Advisors is the placement agent for the fund and soft marketing commenced two months back.
Led by Hong Kong-based Skip Schwartz, the managing director for private equity in Asia-Pacific, Heitman has steadily carved out its regional real estate portfolio to match the investment track record it has built in the US and Europe – markets where the firm has been transacting since decades.
A review of Heitman’s Asia deal book shows how the firm has been careful in dipping its toes in the region. Before the much-anticipated news of the fundraising, Heitman was mostly transacting through direct investments and joint venture partnerships in mature economies. Its first real estate investment in the region was in 2011 – a $266 million joint venture with Abacus Property Group, a listed property developer, to purchase real estate assets in Australia. The first asset acquired under the 75:25 partnership, with Heitman providing 75% of the equity and Abacus the remaining, was a commercial office building in Sydney for $35.6 million.
Next in line was Japan. Earlier this year, it invested $60 million in the acquisition of two office assets in Tokyo’s central business district.
With its first indirect investment via a fund structure in the region, Heitman is targeting markets where it has prior expertise – Japan and Australia – along with the developed real estate markets of Hong Kong and Singapore. This cautious approach perhaps explains why the firm hasn’t invested in China yet. In an interview with the South China Morning Post dated June 2014, Mary Ludgin, the managing director, head of global research of the firm said that Heitman is patient and in no need to rush, recognizing that the Chinese economy is in a major period of change.
The new fund’s structure also follows a similar approach as the series of value added close-ended funds it has previously raised in Europe and North
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