MGPA deal expands BlackRock’s Asia footprint

The development is part of a global real estate portfolio that will come under the control of alternatives manager BlackRock following its acquisition of Berlin-headquartered real estate investor MGPA.

MGPA, which has raised $8.5 billion to date, is the latest in a line of firms to be gobbled up by the asset-hungry giant, which has bought itself exposure to private equity, real estate, energy and hedge funds to meet demand for more diverse investment strategies.

This is not to suggest the acquisition was unwelcome - MGPA had been on the lookout for an investor six months prior to the deal. The real estate fund management industry has been under pressure since the global financial crisis and it is the larger operators that find it easier to raise money, attract staff and generate efficiencies of scale that translate into the returns demanded by investors. To some, consolidation is inevitable and desirable.

"We thought it was an appropriate time to start filtering through the market and try to find a partner to help us take the business to the next level." says Simon Treacy, CEO of MGPA, adding that the priority was finding a partner with a strong brand and distribution capacity, and a commitment to real estate. "BlackRock ticked all those boxes. It was a very complementary transaction."

The combined business will have $25 billion in property assets under management and allow BlackRock to increase its exposure to Europe and Asia, where real estate is an increasingly important part of its investment strategy.

The majority of MGPA's portfolio is spread across Asia, in Japan, Malaysia, Singapore, China and Australia. This year it acquired J-Tower in Shanghai, Optima Centre in Perth and, more recently, a group of office buildings in Tokyo. Japan accounts for the majority of the firm's Asian exposure and Treacy describes the market as a sweet spot for investments and selective exits.

"Japan is certainly getting some momentum from Abenomics," he explains. "Improved demand drivers, which have been lacking over the last five years, are now coming into the market, so it is a very exciting time for real estate - especially in Tokyo." Treacy adds that early indications from consumer and business sentiment surveys suggest an improvement at senior levels of business, especially with regards to capital expenditure.

MGPA is currently fundraising for MGPA AsienSpezialfonds, a regional fund specifically designed for German investors. It has so far raised EUR135 million ($175 million) towards a EUR500 million target.

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• Topics
• Buyouts
• Real estate
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• MGPA
• BlackRock
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