Secured Capital Japan, the Tokyo-listed private equity real estate firm, has closed on $155 million for SCJREP Loan Fund, its first dedicated distressed debt investment fund.
The firm is expected to close on up to $300 million in total for the vehicle which is understood to be under due diligence from up to four large ticket investors. Fundraising for the fund is due to close in early July.
SCJ, which has around $6.3 billion of assets under management, decided to raise a distressed amid demand from investors in its fourth real estate opportunity fund, the $525 million SCJREP IV. They called for greater exposure to Japanese distressed debt opportunities than the 25 percent exposure the vehicle could offer.
SCJREP Loan Fund will run concurrently with SCJREP IV, which has a lifespan of eight years, and will target an internal rate of return of at least 15 percent. It has made just one investment to date – a $20 million purchase of a loan collateralised against a Tokyo residential scheme.
SCJREP IV closed in August and is already a third invested in Japanese assets including a headline grabbing investment in Pacific Century Place, a giant office building in Tokyo’s Marunouchi area that used to be managed by Japanese private equity real estate giant daVinci Holdings.
After daVinci failed to meet its debt obligation on the building, SCJ won a bidding war to capture it. The purchase price was not disclosed but it was reported that the firm agreed a deal valued at no more than ¥150 billion (€1.3 billion; $1.5 billion) and which included the assumption of the assets non-disclosed but believed to be sizeable debt.