Warburg Raises $2.8 Billion for Its First Asia Real Estate Fund

(Bloomberg) -- Warburg Pincus raised $2.8 billion for its first fund dedicated to real estate in Asia, far exceeding its initial target as the firm taps interest from investors in technology-linked assets such as logistics and data centers.

Launched in November last year with a $1.5 billion target, The Warburg Pincus Asia Real Estate Fund LP raised 60% of its capital from leading institutional investors in Asia, the firm said in a statement Wednesday. It’s the second-biggest pool of such capital raised in the region after Blackstone Group LP’s $7.1 billion real estate fund in 2018.

Firms including KKR & Co and PAG have stepped up real estate deal-making in Asia as fast economic growth and changing demographics are driving demand for modernized warehouses and other property assets. Industrial and logistics proved to be the most resilient asset class in Asia-Pacific real estate in the third quarter, underpinned by strong demand for safety stock to guard against supply chain disruptions, according to a November research by CBRE. 

“We are currently witnessing a once-in-a-generation change in real estate driven by technology where leading global investors are seeking to rebalance their portfolios by investing more capital into new economy real estate where they have been meaningfully underweight,” Jeffrey Perlman, head of Asia-Pacific real estate and Southeast Asia at Warburg Pincus, said in the statement. 

KKR announced the final close of a $1.7 billion Asia real estate fund in January, while PAG completed its ninth opportunistic real estate fund at $2.75 billion in April 2020.

Warburg Pincus, which manages $67 billion globally, has been scooping up property assets in Asia for more than a decade, having deployed more than $6.5 billion in more than 40 real estate ventures through its global and China-Southeast Asia funds, the firm said. 

Co-founding ESR Cayman Ltd. in 2011, the firm sold all its retail and commercial assets in China by 2015. It then grew its new economy property investments to over two-thirds of its real estate portfolio. 

It co-founded industrial real estate platform D&J in 2014 and in 2017 invested in pan-Asian data center provider Princeton Digital Group. D&J China, which has over $5 billion in assets across modern manufacturing parks, life science and IT parks in China’s tier-1 cities, announced last week it completed a merger with New Ease China, also backed by Warburg Pincus.

Warburg Pincus reaped a more than 10 times return on its investment in ESR, a person familiar said earlier this year.

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