Last month, LaSalle Investment Management went to market with its fifth Asia opportunistic fund.
The Chicago-based real estate manager is one of only a few seeking capital for the strategy right now. According to PERE research, only two other Asia-focused opportunistic vehicles have been launched in 2016 so far, namely by Apollo Global Management and PAG Real Estate. Also in the market is Invesco Real Estate’s $500 million fund, which was launched last year.
Two opportunistic fund managers have told PERE that investors are keen to deploy capital only with managers that have a track record for generating opportunistic returns of around 20 percent in the current high risk environment. To that effect, some opportunistic fund managers, including LaSalle, have been able to get re-ups from existing investors.
However at the same time, they do acknowledge the dearth in the number of Asia-focused opportunistic funds, which is largely a function of limited investor demand for newer managers with limited track records and the challenges of finding attractive opportunistic deals commensurate to the desired level of risk.
Calvin Chou, head of Invesco’s Asia opportunistic funds business, said most of the large global public pension funds have started to move down the risk curve and have preferred core deals over the last few years. “Generally speaking, a lot of these pensions have made high double digit returns from core deals in the last four to five years,” he said.
Additionally, investors have also turned more cautious and risk averse in both China and Japan because of the countries’ weaker-than-expected economies and concerns over further depreciation of the yuan, according to CBRE’s second quarter report.