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Global real estate manager looks to double Asian bets

Franklin Templeton is looking to double its real estate assets under management in the high-growth Asia Pacific region with the launch of a new fund over the next few weeks.

Jack Foster, the US-based veteran of global real estate investing who has headed up that division since 1987 (with Franklin Templeton’s predecessor company Fiduciary Investors), says the new Asian real estate fund will pick up where the first fund, which raised $300 million in 2008, left off.

The first fund still has 50 per cent in cash, although 73 per cent is committed and the manager is “not fully out with the launch” of the new fund, which is looking to raise a similar amount from institutional investors.

“Our strategy is the same,” Foster said in a visit to the region last week. “The main differences are that Japan is more of a distressed debt play rather than buying assets and the veneer has come off India.”

The funds of funds real estate specialist says the focus of the new Asian found is China and Japan, followed by Hong Kong, Singapore and Korea.

“All have different risk profiles,” Foster said. “Real estate is the most local of asset classes. There is no global pricing. That’s why the asset class has good inefficiencies to be exploited. For example, Hong Kong is more efficiently priced than China.”

Chinese real estate  “represented by long-term leases” is more transparent than several years ago but getting difficult to buy, Foster says.

The fund is a closed-end vehicle with a seven-nine-year lifespan.

Franklin Templeton tends to invest in smaller and emerging property funds which can better capture market inefficiencies.

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