Gaw Capital Closes APAC Fund at $2.2B

Gateway Real Estate Fund VI is the largest raised by the investor since its founding in 2005.
625 King’s Road. Image via Google Street View

Gaw Capital Partners has completed the final close of Gateway Real Estate Fund VI at the investment vehicle’s hard cap of $2.2 billion. The total commitments make Gaw Capital’s sixth Greater China/Asia Pacific fund the firm’s largest fund ever raised since its 2005 inception.

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Fund VI launched in June 2018, according to SEC filings, with a target raise of $2 billion and a focus similar to that of its predecessor funds: Real estate assets with favorable risk-return profiles predominantly in China’s gateway cities and in Japan, Vietnam, South Korea, Singapore, Southeast Asia and Australia. Fund VI attracted new investors as well as repeat participants, including sovereign wealth funds, endowments, pension funds and additional top-tier institutional investors. San Francisco Employees’ Retirement System contributed $50 million in October 2018, marking the pension’s fifth investment with Gaw Capital. New York State Teachers’ Retirement System is among the Fund VI investors too, having also committed to Funds IV and V.

According to Hong Kong-based Gaw Capital, investors were enticed by Fund VI’s value-add strategy and focus on diverse real estate sectors, including retail, office, industrial, residential and hospitality, as well as health care, education and data centers. Beyond direct property investment, the fund is also looking at operating thematic platforms and pre-IPO real estate companies seeking strategic capital investment. Fund VI acquisitions include 625 King’s Road, an approximately 300,000-square-foot office tower in Hong Kong purchased for $605 million, in addition to multifamily buildings in Japan, senior living assets in Australia and a retail portfolio spanning 12 shopping malls in Hong Kong. Fund VI will continue to invest based on a strategy specific to each geographic market.

The APAC allure

Fund VI, like its predecessors, has fervent cross-border appeal. Forty-six percent of the fund’s global investors are from Europe, 17 percent are from North America, with the remaining 37 percent hailing from Asia. Other global investment managers that are actively addressing the international investment community’s interest in the Asia-Pacific real estate market include Phoenix Property Investors, which closed its Phoenix Asia Real Estate Investments VI in November with $1.2 billion in commitments from endowments and foundations, pension plans and sovereign wealth funds across Asia, North America, Europe and the Middle East. Also last month, LaSalle Investment Management, launched LaSalle Japan Property Fund with $560 million of equity commitments.

The Asia-Pacific region continues to be a strong international draw. Four Asian cities—Shanghai, Singapore, Sydney and Hong Kong—ranked among the top-10 largest recipients of cross-border investment in the third quarter of 2019, according to a report by JLL.