GLOBAL - CBRE Investors' global multi-manager business, which has just raised $269m (€218m) from European pension funds for its new Asian fund of funds vehicle, expects to invest increasingly in 'club deals' in the future.
The fund manager achieved a final close on its CBRE Asia Alpha Plus fund (AAP), backed by 10 pension funds based in the UK, Ireland, Finland and the Netherlands, and will invest some of its capital by partnering up with small clubs of investors.
Pooled funds with numerous, anonymous investors have fallen out of favour with many large investors who are increasingly looking at joint ventures and smaller club deals as an alternative.
But this is the first time a fund of funds manager has joined the movement.
Jeremy Plummer, head of global multi-manager at CBRE Investors, said: "The club deal format, where a small number of investors come together on a pre-identified portfolio, has an attraction.
"That is a model being favoured by large-size, sophisticated investors. We definitely want to be there too."
Plummer said CBRE Investors had the capability to operate in this space, which he said required the ability to underwrite specific property assets, as well as evaluate the skills of fund managers.
"We see that as being a major part of our business going forward," he added.
AAP, which is managed by the global multi-manager team in the Asia Pacific region, lead by Adrian Baker in Singapore, will also invest in specialist funds with pre-identified asset portfolios, and in funds through the secondary market, or 'secondaries'.
CBRE Investors, which made a first closing in July 2009, has already invested 40% of the capital in five deals, including a distressed debt strategy in Japan, secondaries offering exposure to Hong Kong and conventional core strategies targeting Australia.
Plummer said APP would focus on mature markets, as they can achieve target returns of 13-15% a year, combined with a core or core-plus-risk profile.
"They are higher returns on relatively low-risk investments in mature markets, so that is a very appealing combination of characteristics," he said.
APP will also invest in emerging markets, although this will be limited to approximately 20% of total assets.
The fund will focus on residential markets, especially in China and Vietnam.
"In China, the residential market is possibly becoming a bit overheated," Plummer said.
"It is getting reined in, so we are being a bit cautious about it at this stage.
"Vietnam, having had a correction, hasn't had quite the same price surge as China, and the fundamentals are all moving in the right direction."
India, meanwhile, is not seen favourably given the development risk entailed.
"To warrant taking development risk in India, you should be taking a very much higher return than mid-teens on an income-producing asset in a developed market," Plummer said.
"We are just not confident it is there."
