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Tokyo recovery fund reaches $212m

Aviva Investors and Secured Capital Investment Management have revealed details of a second close for their Tokyo Recovery Fund vehicle.

Aviva Investors and Secured Capital Investment Management have taken fundraising for their core-plus Tokyo Recovery Fund to $212 million of capital commitments, they have revealed.

The update comes on the heels of a first close announced in November last year when the pair said they had managed a total of $122 million following commitments by from Aviva Investors’ parent, London-based insurer Aviva, and Dutch pension fund manager, PGGM Investments.

The companies said that they aimed to raise more from institutional investors, targeting a final equity raise of $250 million and 50 percent gearing giving it $500 million spending power.

The core-plus fund was established by Aviva Investors’ Singapore-based Asia Pacific Real Estate team and Japan real estate specialist, Secured Capital, to take advantage of “constrained” Japanese capital markets by acquiring a portfolio of quality office real estate in prime locations in central Tokyo.

Ian Hally, Aviva Investors’ chief executive officer of Asia Pacific Real Estate, said in a statement that the fund had earlier this year bought Meguro Place Tower, a 14 storey office.

Naoya Nakata, managing director at Secured Capital, added: “The capital value of quality office buildings in Tokyo remains far below pre-GFC (Global Financial Crisis) levels and well below replacement cost. The current levels of rent have begun to induce strong demand for quality office spaces and we see limited new office supply in the coming years. Attractive debt terms are obtainable for those quality office buildings, which creates quite attractive investment opportunities for our fund investors.”

Aviva is the general partner and Secured Capital is acting as the asset manager.

Though the vehicle is called a ‘fund’, it is closer perhaps to being a blind-pool club. As previously reported, it has a hybrid investment vehicle structure borrowing from the traditional blind pool fund model and the currently popular investment club.

It is expected to run for up to 18 months and generate core-plus style returns of between 10 percent and 12 percent from its investments.