Secured Capital holds $175m first closing

The Tokyo-based firm becomes one of a small handful of managers to attract equity to a blind-pool real estate vehicle in Asia during 2012.

Secured Capital, the Tokyo-based private equity real estate firm, has attracted $175 million of equity for the first closing of its latest opportunity fund.

The firm said in a notice today that it formally began fundraising for its Secured Capital Real Estate Partners V (SCREPV) fund in the fourth quarter of last year and that it expected to hold a final closing for the vehicle at $1 billion before the end of March 2013.

This represents a slight shift in timescales from the firm’s pre-launch expectation of a first closing in the last quarter of last year and a final closing at the end of this year.

Nonetheless, Secured Capital becomes one of a small handful of private equity real estate firms to hold closings on traditional investment funds in 2012. According to PERE’s Capital Watch, just $1.12 billion was raised for value-added and opportunity funds in the year to July. In Japan, only Fortress Investment Group and GreenOak Real Estate have also attracted significant capital for their funds.

Furthermore, Secured Capital has also had capital raising success for other investment vehicles. Earlier this month, the firm brought its 18-month, core-plus, club-fund with Aviva Investors – the Tokyo Recovery Fund – to $212 million thanks to a second closing of $90 million.

At the time of SCREPV’s launch, Secured Capital said it would be mainly used to invest in distressed real estate situations and debt in Japan although it could invest up to 40 percent of the vehicle’s capital in China should the appropriate opportunities arise.

At that time, J-P Toppino, president and chief investment officer of the firm told PERE the debt portion of the firm’s strategy revolved around the scale of the country’s maturing CMBS and the need for Japan’s banks to impair their holdings from 3 percent to 1 percent which he described as a “$70 billion to $80 billion opportunity.” He said: “My view is that next year there could be pretty good plays to be done.”

SCREPV is expected to run for eight years with options for two one-year extensions. Its investments are expected to generate an internal rate of return of between 17 percent and 20 percent and a 2x equity multiple.