By the end of the summer, Asia will have its ninth and 10th private real estate fundraisings of more than $2 billion. PAG Real Estate Partners II and Gateway Real Estate Partners VI will elevate their managers, Hong Kong-based PAG Real Estate and Gaw Capital Partners, into a small cohort of managers to have passed the mark, including Blackstone, GLP, BlackRock and the now defunct daVinci Advisors.
PAG Real Estate Partners II
PAG Real Estate is expected to hit its $2.25 billion hard-cap for the pan-Asia core-plus-value-add vehicle in July or August. The fund will have the same investment strategy as its 2016 predecessor, which attracted $1.3 billion, essentially outlays across Asia’s gateway cities and predominantly in office markets. Residential investments in Japan will also feature for the eight-year fund. PAG is looking for 10-13 percent net returns, slightly lower than what the first vehicle has been achieving, in light of the market cycle. It is understood about $600 million of the vehicle has already been deployed. Placement agent Park Hill assisted in fundraising, although the lion’s share of the equity haul was done by PAG’s internal team, PERE understands.
Gateway Real Estate Fund VI
Fundraising for the latest Gaw Capital vehicle reached $3 billion when co-investment allocations are included. The main fund will comprise $2.2 billion, mostly from repeat investors. The vehicle will meet its hard-cap, though the original hard-cap was $2 billion. Gateway Real Estate VI, already 30 percent deployed at the time of writing, will offer more thematic platforms focused on domestic consumption, which the firm will seek to grow through co-investments. This is a slight shift from Fund V. Education, healthcare, data centers and co-sharing concepts will be big themes for the fund as they are not expected to be affected significantly by geopolitical volatility. Fund V, meanwhile, is fully invested with one exit that generated a 20 percent plus internal rate of return, according to a source.
Neither firm would comment. These record fundraisings come as investors eye increased allocations to Asian real estate. According to the latest annual joint Investor Intentions Survey of associations ANREV, INREV and PREA, 56.7 percent of respondents globally expected to increase their allocations to Asia Pacific over the next two years. Just 12.4 percent expected to decrease their allocations.