RECAP III fundraising reaches $185m, completes maiden deals

SC Management, the Hong Kong and Singapore-based private equity real estate firm has already put approximately $60 million of the fund’s capital to work, acquiring a controlling position in a J-REIT and a Thai office-led property from the estate of Lehman Brothers.

SC Management, the Hong Kong and Singapore-based private equity real estate firm best known for its pan-Asia Real Estate Capital Asia Partners (RECAP) opportunity fund series, has brought capital raising for its latest fund to $185 million.

PERE has learned that the firm, led by Suchad Chiaranussati, has added to its initial $60 million closing since last September, with fresh commitments coming from US and Asian investors in three further closings.

Its ultimate fundraising target for the fund, Real Estate Capital Asia Partners III (RECAP III), is $400 million and the vehicle has a hard cap at $500 million.

In addition to the capital raised, another $30 million is in detailed due diligence and is close to being added to the total. Park Hill Real Estate Group is advising SC Management on its capital raising.

SC Management has already started to deploy the capital, investing an initial $59 million in two transactions: a controlling investment in a J-REIT and an office-led property in Bangkok.

SC Management acquired the asset manager and a controlling 22.1 percent stake in Japan Hotel & Resort, a J-REIT which controls nine hotels in Japan valued at about $1.2 billion, from units of Goldman Sachs.

It was the second time the firm has invested in the J-REIT sector having last year bought a 70 percent stake in the asset manager of Nippon Hotel Fund Investment Corporation and a 27.3 percent stake in the shares of the REIT itself. In total, the group owns controls a portfolio of 29 hotels in Japan, 28 of which are held in J-REITs with the remaining one held separately within the RECAP funds.

The seller of the Thai office property was Alvarez & Marsal which was acting on behalf of the estate of collapsed Wall Street bank Lehman Brothers.

Overall, the capital of RECAP III is expected to be deployed one third in Japan, one third into Greater China and the remaining third in Southeast Asian countries. Investments are expected to yield a return of 20 percent IRR and 2x equity in line with typical opportunistic real estate funds.

While SC Management declined to comment, the firm’s backing from investors was almost certainly a result of good performances in the firm’s prior funds. SC Management’s debut fund, 2005’s $220 million RECAP I, is now fully exited and has returned approximately 16 percent IRR and 2x equity. Its follow-up fund, RECAP II, which closed on just more than $190 million at the end of 2009, is more than 75 percent invested and is understood to be currently projecting an IRR of more than 30 percent IRR and 2x equity again.

The firm declined to comment.