AEW Capital Management Closes Asia-Pacific Fund

The Boston-based company has closed its second pan-Asia investment fund with $640 million in commitments.
David Schaefer, AEW Asia

David Schaefer, AEW Asia

Asia-PacificAEW Capital Management has closed its second pan-Asia value-added fund, AEW Value Investors Asia II LP, with commitments totaling $640.2 million, including $50 million of client co-investment capital.

“Our target gateway cities have strong underlying growth and this leads to good absorption and rental growth. They are also highly liquid, meaning healthy transaction levels in commercial real estate,” David Schaefer, AEW’s head of Asia, told Commercial Property Executive. “By focusing on well located office assets we are able to take advantage of demand by repositioning for higher rents and leasing vacant space to create core assets. On the retail front, necessity vs. luxury is a strong play given rising incomes and middle class urban populations.

The capital raised comes from public and corporate pension plans and insurance companies based in both the U.S. and Europe.

According to Schaefer, the strategy for the fund is focused on the acquisition of assets in key gateway cities across the Asia-Pacific region, principally Hong Kong, Singapore, Seoul, Shanghai and Sydney. The goal of the fund is to create value and drive overall returns through the repositioning, redevelopment, releasing and refurbishment of commercial assets.

“This is AEW’s second Asia value-add fund, and as a fiduciary we are able to provide real estate investment exposure in Asia to clients of the firm who may also be investing with AEW in other geographies or strategies,” he said. “The fund currently has six assets in four cities (representing $253 million of equity and over 937,000 square feet of office and retail assets). Over the next two years we expect to roughly double the number of assets across our target markets.”

Of the six assets, Hong Kong and Seoul are home to two each, with one each in Singapore and Shanghai.

In November of 2015, AEW acquired The Dongyeouido Building, a 157,393-square-foot, 14-story, Grade B office building in Seoul, South Korea, for $53 million from Samsung Life Insurance on behalf of AEW Value Investors Asia II LP.

“Our goal is to reposition this asset through our capital improvement program to capture the strong tenancy demand in the market,” Schaefer said at the time of the purchase.

According to Colliers’ latest Asia-Pacific report, optimism reigns in Asia-Pacific and capital flows continue to increase across the region.