LACERA considers putting $100m into Asia real estate

Los Angeles County Employees Retirement Association (LACERA) is seeking approval to double its real estate investment in Asia to $100m (€84.7m).

The pension fund has already been given the go-ahead to invest up to $50m into the AEW Value Investors Asia III fund.

LACERA said in its board meeting report that it is considering approving a $50m commitment to the Heitman Asia Property Investors fund in 2018.

The planned commitment to the AEW fund would be the pension fund’s first pan-Asia investment since LACERA adopted its international real estate implementation plan in October of last year.

This plan is to make $600m worth of international real estate commitments over the next three years.

According to LACERA, AEW expects the final close for its $750m capital raise target in March next year. AEW declined to comment.

The first close for fund was in September with total commitments of $360m from four investors, including a $100m commitment by Teacher Retirement System of Texas.

AEW will co-investing 3% of total commitments, up to $15m.

The expected returns for the fund are a 13% to 15% net, with around 4% cash distribution once the properties have been stabilised.

The fund will be mostly investing in the gateway markets of Hong Kong, Singapore, Shanghai, Seoul and Sydney. Secondary markets considered for the fund are Melbourne, Beijing, Taipei and Kula Lumpur.

The AEW fund has already bought one office building in Sydney and there are two additional office properties in advance stages of due diligence scheduled to close during the first quarter of next year.

The fund will be looking to find assets that need repositioning, re-leasing or renovations to substantially increase operating income and value.

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