Macquarie Global Property Advisors, a private-equity property fund owned by Macquarie Bank and its principals, has announced the final closing of its MGP Japan Core Plus fund with commitments of $865 million.

The bank had envisaged the fund hitting $500 million but in the event, despite the upsizing, still had to leave investors supplying some $300 million on the sidelines.

The life of the fund is nine years, with average deal lifespan per building of approximately seven years. MGPA did not disclose the fee structure, but Jim Quille, the CEO of MGPA, speaking to Asian Investor from Luxembourg, says the huge demand suggests the fees were in the right ballpark.

This fund has commitments from 22 pension fund investors in Europe and Australia who want exposure to the Japanese real estate market. It plans to invest in the full range of Japanese real-estate sectors, from commercial and residential through to industrial. After leveraging, the fund will be looking to pick up a portfolio of property assets totaling $2.5 billion.

This æcore-plusÆ branded fund plans to invest in lower-risk property deals than the previous Macquarie property funds. The previous pair of MGPA Global Funds are more opportunistic in nature, with target IRRs of 20%. This Japanese fund has a target annual return of 12%, because it looks to invest in assets with stable yields, as opposed to properties that need more work done on them. This explains the absence of American investors in the new Japanese fund as they tend to look for a higher return.

MGPAÆs first global fund scooped up 12 office properties in Japan and the second fund has acquired 13 office, retail and residential buildings in Tokyo, Sapporo and Kanezawa. That fund, æMGPA 2Æ, closed with $1.3 billion in September 2005 and now has $4.8 billion in property assets on its books.

This new fund has already made its first purchase of 13 properties for $80 million. This consists of nine residential and four office properties in four Japanese cities.

Future plans are for a third opportunistic fund æMGPA 3Æ, to be launched later this year to raise $3.5 billion, of which about two-thirds of which will be earmarked for Asia and the remainder in Europe. Another lower risk, æcore plusÆ branded fund is planned for the third quarter of 2007, and this will focus on European property investments.