Published June 17, 2008

MGPA closes US$5.2b Asia, Europe fund

Fund to invest in Marina View project, which will have 2m sq ft of offices


MGPA - formerly known as Macquarie Global Property Advisors and one of the biggest real estate investors in Singapore last year - has announced the final closing of MGPA Fund III with commitments for total equity of US$5.2 billion.

This war chest potentially gives the fund a buying power of US$20.8 billion, assuming 75 per cent gearing.

Among the acquisitions that the latest fund will finance is the equity portion of MGPA's development of Marina View land parcels A & B in Singapore - which will have two million square feet net lettable area of offices - and the purchase of units at the 8 Napier condo near Botanic Gardens, MGPA Asia Investments CEO Simon Treacy confirmed to BT yesterday.

MGPA is a private equity real estate investment advisory company.

The Marina View project, with a total investment sum reported in March this year to be around $5 billion, will have two office towers, a 250-room luxury hotel plus some retail space.

'We see a significant number of international banks, particularly in the wealth management sector, being interested in this type of office space,' Mr Treacy said.

The project is expected to be completed in two stages in 2011 and 2012 - which will contribute to an anticipated spike in Singapore's office space. But Mr Treacy said: 'We believe that the market has completely under-estimated the level of demand and that the level of future supply will be eaten up very quickly.'

He is also sticking with his forecast made in March that prime-grade Singapore office rents will appreciate between 10 and 25 per cent this year after last year's 80-90 per cent surge.

Mr Treacy also maintains that Temasek Tower, which an earlier MGPA fund bought for $1.04 billion early last year, is a long-term investment.

The latest US$5.2 billion MGPA Fund III comprises two regionally based private equity property funds - the US$1.3 billion or 841.5 million euro (S$1.79 billion) MGPA Europe Fund III, and MGPA Asia Fund III, which has raised US$3.9 billion, of which 56 per cent or US$2.2 billion is already committed to investments in Singapore (Marina View project and the 8 Napier condo units), Japan, China and Thailand in the office, retail, residential, hotel and logistics sectors.

In addition, the new Asia fund has opportunities under consideration in South Korea, Malaysia, Taiwan and Australia.

'Now that we've got one of Asia's largest private equity real estate funds, we have a lot of driving power and we can be patient because pricing is getting more favourable for us,' said Mr Treacy.

'We see also corporate opportunities as well as real estate opportunities reflecting the ongoing credit crunch in the overall Asian market.'

As for the MGPA Europe Fund III, 103 million euros of the total 841.5 million euros raised has been committed to investments in the residential sector in Wroclaw, Poland, and a strategic development site in Athens, Greece. The fund has a mandate to invest in the 27 European Union member states, Switzerland and Norway.

The total US$5.2 billion total equity commitments for the two regional funds have been raised from more than 65 investors and include a substantial number of renewed commitments from existing investors in North America, Australia, Europe and the Middle East.

'MGPA has attracted a broad range of investors including corporate and public pension funds, insurance companies, foundations and endowments looking for exposure in the European and Asian real estate markets,' the company said.