BPEA Real Estate is a part of Baring Private Equity Asia (BPEA), one of the largest independent alternative investment firms in Asia. Founded in 1997, BPEA has a 23-year track record of investing across Asia and today manages over $20bn in capital commitments. BPEA employs over 190 people and operates from nine global offices located in Hong Kong, Singapore, Shanghai, Tokyo, Beijing, Sydney, Mumbai, Delhi, and Los Angeles.
As one of the few Asia headquartered private real estate managers with a pan-Asian footprint and capabilities, BPEA Real Estate takes an integrated and holistic approach to investment opportunities across the region that leverages the firm’s pan-Asian platform. Through detailed analysis of historical values, replacement cost and the balance between demand and supply, BPEA Real Estate seeks to identify where a particular sector in a specific country is in the context of the broader real estate cycle. BPEA Real Estate seeks to generate attractive risk-adjusted returns with a strong focus on capi- tal preservation by constructing well-diversified portfolios of multi- strategy private real estate investments across the Asia Pacific region.
BPEA Real Estate has a dedicated team of 25 real estate specialists with an average experience of 15 years and is led by Mark Fogle, who has been investing in Asian real estate since 1992. Collectively the team has invested over $5.5bn of capital across 125+ Asian core, value- add and opportunistic debt and equity transactions.
We aim to generate attractive opportunistic returns with lower levels of risk at any point in the real estate cycle by identifying the most attractive sectors in the context of the broader market. Our current focus areas, identified through our in-depth research-driven sector analysis, are: logistics, hospitality, residential and office.
LOGISTICS: The Asia Pacific logistics sector is at the beginning of a long-term growth cycle, underpinned by a structural shift from offline to online retail. The adoption of e-commerce in Asia – both as a supplier and a source of domestic demand – places the region at an advantage to other parts of the world, yet many countries do not have sufficient supply of modern logistics facilities.
China stands out as an attractive destination due to its rate of urbanisation and increasing domestic consumption; however, restrictive government land control continues to result in a significant shortage of modern logistics facilities, with 95% of China’s existing stock facilities still considered substandard. The COVID -19 pandemic has increased the attractiveness of the sector by expediting the shift to online, combined with government initiatives to remove wet markets and substandard logistics facilities.
HOSPITALITY: Asian tourism and hospitality has grown significantly in recent years, predominantly due to the rise in outbound Chinese tourism, and we expect this trend will continue. The COVID -19 pandemic had a material impact on the industry, particularly on independent and family-run hotel businesses. However, we expect the longer-term industry fundamentals and the tailwind from the rise of China’s middle class to be mostly unaffected. Shorter to medium-term distressed opportunities are likely to provide attractive entry points into key gateway cities that are set to recover from COVID-19 fastest. The largest beneficiaries of Chinese tourism are Japan, South Korea, Australia, and Thailand, though we see opportunities throughout the entire region.
OFFICE: In China, increased demand from tenants seeking to shift towards more spacious office parks, away from dense CBD buildings, is a broader trend that underpins our focus on suburban value-add properties. In the Philippines, we have been investing in BPO office buildings where demand continues to benefit from the global outsourcing trend. In the longer term, the COVID-19 pandemic, which will increase the focus on the availability of wellness features – such as more space per employee, green space and ventilation and cost-cutting-driven BPO demand, is expected to have a positive impact on the underlying fundamentals.
RESIDENTIAL: We remain cautiously optimistic about the luxury residential market, especially in Hong Kong and Tokyo, which has proven to be highly resilient. In the medium term, we expect to see more COVID -19-driven opportunities from distressed owners of high-quality assets. Our flexible approach towards buying residential – such as through buying and developing land, buying en bloc, or providing structured debt to developers or other investors – provides an opportunity to continue investing through the cycle.
RETAIL: The traditional retail environment continues to be challenged by the broader structural shift from offline to online retail. COVID -19 has expedited this transition and we believe the impact of the pandemic will persist in the longer term, further decreasing the attractiveness of the sector.
Investment principles & strategy
BPEA Real Estate’s investment philosophy is based on six key investment pillars:
- Multi-market strategy
- Research-driven brick and mortar focus
- Low leverage
- Focus on post-investment value creation
- Operating partners
- Liquidity and multiple exit paths
BPEA Real Estate runs two investment strategies on behalf of our investors:
- Pan-Asian value-add and opportunistic fund program
- Chinese logistics co-investment platform
Pan-Asian Fund Program
BPEA Real Estate seeks to generate opportunistic returns by investing in a well-diversified portfolio of private real estate investments across the Asia Pacific region. The firm is currently investing from the $1bn BPEA Real Estate Fund II.
Chinese Logistics Co-investment Platform
BPEA Real Estate is capitalising on the strong underlying demand and critical undersupply of modern logistics facilities in China through its investment in Forest Logistics, a logistics property development and operating platform with identified projects located at key logistics gateway cities across China. BPEA Real Estate controls both the asset light operating company (OpCo) and asset heavy real estate holding company (PropCo) of Forest. The platform is currently investing $485m of capital, with further expansion to follow.