UK - The Ediston Opportunity Fund, which raised capital from pension funds in 2007, has made a number of investments following more than two years of inactivity and is consulting investors on raising more capital.
A number of UK pension funds, including Oxford University and Falkirk Council, committed capital to opportunistic vehicle only months prior to the credit crunch, through the advice of Schroder Property Investment Management.
Ediston Properties, as manager, was at the time anticipating investing heavily in development assets and properties needing refurbishment, but following three acquisitions in the first half of 2007 it froze all further investment activity.
The fund began screening the market once again in the latter half of 2009 and recently purchased offices in Bath, Scotland and Sheffield for close to a total of £40m (€45m).
The new acquisitions constitute lower risk investments compared with the assets purchased in 2007, according to William Hill, who is on the board of executives at Ediston Properties and head of property at Schroders, which also owns a stake in Ediston Properties.
Hill said the assets bought in 2007 all had "refurbishment angles", but the fund manager was now pursuing core real estate assets with good tenants on long leases.
Ediston believes it is possible today to achieve the original target investment return set in 2007 by investing further down the risk scale, because of the repricing in the market, according to Hill.
"You don't need to take more risk to achieve the fund objectives, so why take it?" said Hill.
Sam Ellis, head of pensions at the Oxford University Staff Pension Scheme, said there had been no concerns about the delay to the Ediston fund's investment programme or any changes to its strategy going forward.
The University of Oxford Staff Pension Scheme invests in a number of core property unit trusts and sector-specific real estate funds in the UK, but the Ediston vehicle is the only opportunity fund it has exposure to in the UK.
"The whole purpose was to try to generate a bit of extra performance, but then the circumstances of the last 18 months or so have tended to mitigate against that," said Ellis.
"Having said that, the concept of having an opportunity fund to generate a bit of outperformance is still one that holds good I believe, and let's see how it progresses."
Hill said Ediston Properties was discussing with existing investors the possibility of raising further capital to increase the size of the fund.
"The outcome will come down to whether it is return-enhancing or not to the existing investors," he said.
"Raising new capital will improve the investors' position because you can introduce more assets into the fund, spread risk, etc," he noted.