Asia-Pacific Investors in Distressed and Debt Funds

by Ee Fai Kam

  • 18 Jan 2012
  • RE

Preqin’s Real Estate Online database shows there are 44 investors situated in Asia and Australasia which are interested in distressed and/or debt private equity real estate funds. These institutional investors include banks, corporate investors, superannuation schemes, asset managers, sovereign wealth funds and pension funds. Of these 44, 11 institutions have an exclusive focus on Asia or Australasia. For the remaining 33, besides home regions of Asia and Australasia, they also invest globally in locations such as Europe, Middle East, Africa and the Americas.
The 11 investors that target only Asian and Australasian funds have a combined worth of USD 256 billion, and allocate more than USD 11.7 billion to real estate. The 33 which consider other geographical regions have nearly USD 3 trillion in assets under management (AUM), of which USD 89 billion is allocated to real estate.

One significant investor which considers debt vehicles investing in Australasia is IOOF. The asset manager has a total investment portfolio of over USD 5 billion, of which real estate investments make up 8%. Australia-based IOOF has designated a long term strategic target of 10% to the asset class and intends to invest approximately USD 100 million in private real estate funds this year. It will only consider Australian funds in 2012, especially those targeting assets in the southeastern territories of Victoria and New South Wales.

Another investor in debt and distressed funds is Temasek Holdings. As one of Singapore’s two sovereign wealth funds, it has USD 149 billion in AUM and a real estate allocation of USD 9.3 billion. Temasek Holdings’ main focus is on Asia, where it sees opportunities driven by the needs of a growing middle income population. However, it is also interested in emerging markets and North America. Besides debt and distressed funds, the sovereign wealth fund’s property portfolio also include opportunistic vehicles as well as listed funds and direct investments.  

Korean Teachers’ Credit Union (KTCU) is an investor to look out for in 2012. It intends to invest KRW 655 billion in domestic investments, which includes real estate, over the course of the year. The Korean institution has a global outlook on real estate funds, and is willing to consider all regions. The public pension fund committed to eight real estate and infrastructure funds in 2011, which are all focused on offshore assets. It is as equally diverse in its strategy preference, and is open to core, core-plus, value added, opportunistic, debt and distressed funds. Other than private property funds, KTCU also has direct exposure to assets via club deals. KTCU’s property investments are made from its real asset allocation, which includes infrastructure. Currently, 20% of its USD 17 billion AUM goes towards real asset investments.

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