CLSA Capital to raise at least $400m for fourth real estate fund

Commercial buildings stand illuminated at dusk in Hong Kong, China, on Thursday, Dec. 27, 2018. Photographer: Justin Chin/Bloomberg

Hong Kong-based brokerage and investment group CLSA Capital Partners is looking to raise $400-500 million for its fourth pan-Asia value-add real estate fund, Fudo Capital IV, DEALSTREETASIA has learnt.

The development was first reported by PERE and has been independently confirmed by us.

Based on the report, Fudo Capital IV would be launched in the second quarter of 2019, with a greater investment emphasis placed on northern Asia, particularly Japan.

CLSA lost its real estate CEO John Pattar to private equity major KKR in May 2018, which then sparked speculation that the Fudo franchise will eventually wind down. The PERE report said that 10 executives from the Fudo team have left since Pattar’s departure.

However, we understand that CLSA intends to continue the Fudo fund series with the current senior management team that has been in place for over a decade and helped build the franchise, including Japan head Hirotaka Uchiyama, chief financial officer Yeu Liong Ching, and China and Taiwan head Byron Zhao.

It currently has a team of about 20 professionals based in Hong Kong, Singapore, Tokyo and Sydney, who are focused on achieving exits from the remaining Fudo 3 portfolio assets.

CLSA last raised $1 billion for its third Fudo fund, Fudo Capital III, which was closed in June 2015, exceeding its initial target of $850 million. The vehicle had secured commitments from pension funds, sovereign wealth funds, endowments, asset managers and insurance firms from North America, Europe, Asia and the Middle East.

At the close of Fudo Capital III, it had already deployed over 25 per cent of the total fund commitments into office, retail and logistics assets in Hong Kong, Nagoya, Shanghai and Tokyo. Fudo Capital II was closed at $815 million in 2009, and Fudo Capital had raised $430 million in 2005.

The Fudo franchise focuses on value enhancement strategies through re-positioning, re-development / development, re-leasing and refurbishment of assets located in tier-one cities throughout Asia-Pacific, including Japan, China, Australia, Hong Kong, Singapore, Taiwan and South Korea. Investments range from $25 million to $150 million in equity with asset sizes under consideration ranging from $50 million to $300 million.

According to CLSA’s website, Fudo III has been invested across 13 properties in Asia, with nine exits to date. In total, the Fudo franchise has invested in 31 properties across Asia.

In a challenging economy, private equity firms are still betting their capital on real estate. GreenOak Real Estate is seeking to raise as much as $1 billion for its third Asia-focused real estate fund, GreenOak Asia III, with an investment focus in Japanese major cities.

Singapore-base real estate private equity firms SC Capital Partners is looking to close its fifth Asia opportunistic fund by the second quarter of this year with a target of $1 billion. It reached its first close in December 2017 at $383 million and is likely to have amassed $800 million thus far.

Another player in the industry is Hong Kong-based Gaw Capital, which is eyeing a final close for its $2-billion sixth opportunity fund not later than the second quarter of this year. It recently acquired a 13-storey office tower in Tokyo from GreenOak Real Estate for about $800-850 million.

Also read:

Gaw Capital to make final close of Fund VI by Q2 next year

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GreenOak Asia seeks to raise up to $1b for real estate fund