Singapore-headquartered private equity real estate firm SilkRoad Property Partners has expanded outside of its flagship value-add strategy by launching its first core-plus real estate fund, PERE has learned.
The open-ended core-plus fund, the name of which has not been publicly disclosed, is understood to have reached a first close of $144 million and it will be seeded with three assets. All three are logistics and industrial properties in Hong Kong. With a redemption feature, the fund is expected to grow up to $1 billion in gross asset value over time.
PERE understands that the fund has a long-term return target of 8 to 10 percent per annum on 50 percent leverage. It will target pandemic-resilient sectors such as logistics and industrial, multifamily and senior living, service and convenience retail and life sciences in Hong Kong, Singapore, Japan and potentially China at a later stage.
“This is a high-conviction strategy, based on our own operating experience in these markets and asset classes,” said Peter Wittendrop, chief executive officer of SilkRoad Property Partners. “We look to leverage our sourcing and asset management capabilities honed from years of successfully investing the SilkRoad Asia Value Partners series to create value. We are grateful to the investors who also believe in this strategy and have placed their faith in us to launch the fund.”
SilkRoad has traditionally focused on a value-add strategy and has launched three value-add funds in Asia since 2012. Last year, the firm announced the final close of its third value-add fund, SilkRoad Asia Value Partners II, at $549 million, exceeding its original target of $500 million. The fund reached a first close at the end of 2018 and had extended its fundraising period due to the disruption caused by the pandemic.
Despite having to fundraise and invest during the pandemic, the firm manages existing portfolios that are dominated by pandemic-resilient sectors. Both its portfolio net operating income and valuations are understood to have grown over 2020 and 2021. PERE can also reveal that the firm has divested four assets over the past two years at prices that exceeded underwriting.