AEW Capital Management fund makes first foray into Australia

AEW Capital Management’s second Asian real estate fund, AEW Value Investors Asia II (VIA II), has purchased its first asset in Australia.

The fund bought a B-Grade office building in central Sydney for AUD169m (€116.5m).

The Boston-based institutional real estate manager finalised the acquisition before Christmas with vendor Eureka Funds Management, the Australian subsidiary of AXA Investment Managers-Real Assets.

The closed-end AEW fund has six assets in Hong Kong, Seoul, Singapore and Shanghai, with $255m (€243m) of equity.

The pan-Asia fund held its final close in June last year, raising $640.2m, including $50m of client co-investment capital from public and corporate pension plans and insurance companies in the US and Europe.

At the time, AEW said the fund’s focus was on key gateway cities across the Asia-Pacific region, principally Hong Kong, Singapore, Seoul, Shanghai and Sydney.

It said the fund was seeking to create value and drive overall returns through repositioning, redevelopment, releasing and refurbishment of commercial assets.

At the time, David Schaefer, head of Asia for AEW, said: “The VIA II is well positioned to capitalise on the tremendous opportunity set that exists in transforming under-managed and under-utilised properties into core stabilised assets, and we are pleased to have support from a diverse investor base.”

IPE Real Estate has confirmed the Sydney transaction with AEW.

AEW’s spokesperson was unable to offer further information on the weighting of the fund to gateway cities in Asia Pacific.

The commercial tower acquired by AEW, at 55 Clarence Street, is enjoying rental growth following the withdrawal of several B-grade office buildings in the Sydney CBD for conversion into apartment blocks and hotels.

The recently refurbished office tower also benefits from its proximity to Lend Lease’s South Barangaroo precinct, developed as an extension of the Sydney CBD.

Eureka bought the 55 Clarence Street building in 2011 for AUD83.2m on behalf of a client.

It first offered the asset for sale in May last year.