Private equity real estate firms are no stranger to staffing cuts, but Aetos Capital Real Estate’s recent 85 percent headcount reduction in Asia – from approximately 100 to 15 – was a particularly dramatic downsizing.
The scale down in the private equity real estate firm’s Asia operations is understood to have been made in conjunction with the drop in its assets under management to around $500 million, a source familiar with the situation told PERE. Part of this decrease was the result of the sale of Aetos’s mega Japanese property platform – Simplex Investment Advisors (SIA) – to the developer Hulic Group for an aggregate value of ¥155 billion ($1.54 billion; €1.37 billion) in October of last year.
SIA Group, in addition to owning a portfolio of 13 real estate assets, also manages more than ¥150 billion in assets for third parties, and was fully acquired by Aetos in 2011 via its $2.2 billion Aetos Capital Asia II fund, the largest pan-Asia opportunity vehicle to have been raised at the time.
Aetos, which has been running an opportunistic real estate fund series in Asia since 2003, has also decided to revise its fund strategy. The source told PERE that fundraising plans for Aetos Capital Asia V have been cancelled. The fund was originally launched in September 2013 with a $1 billion target and would have been the biggest capital raising exercise by the firm after the global financial crisis. Its predecessor, Aetos Capital Asia IV, also had an initial target of $1 billion when it launched in 2010, but was eventually converted into a $250 million separate account vehicle seeded by the Chinese sovereign wealth fund China Investment Corporation.
The latest opportunistic fund plans have now been replaced with a lower risk and return vehicle. The firm brought to market a value-add fund two months back and is targeting between $500 million to $750 million. The new fund’s target investment markets, meanwhile, would continue to be in line with the firm’s strategy: approximately 85 percent of the capital would be deployed in Japan while the remainder would be invested in South Korea and Hong Kong.