US - Henderson Global Investors is planning to launch a fifth fund targeting the US multi-family market, which it has identified as the best-positioned sector in the country.
The latest CASA Partners US Multi-Family Housing fund (CASA V) will target an initial equity raise of at least $100m (€76.7m) by the end of this year, although it is targeting a total of $400m with gearing to give it $1.1bn to spend.
The latest fund will employ a three-tiered investment strategy targeting apartment properties with 200 or more units located in urban and suburban markets with strong demographic and economic trends.
Tier one will be value-added and conventional investments in tax-exempt, bond-financed apartments, providing the base financing strategy for the portfolio.
Tier two will represent assets with repositioning potential to enhance returns, both directly and through strategic joint venturing with partners.
The third tier strategy will pursue distressed opportunities with a view to acquiring prime, core apartment assets at low prices.
Apartments have historically proven less volatile than other real estate sectors in the US, and Henderson believes core apartments are likely to offer attractive total returns with a strong income component.
Institutional investors have significantly increased their ownership of the apartment asset class over the past 25 years due to its stable cash flows, diversification benefits and attractive debt financing.
Henderson said the newly acquired unlevered apartments could offer net total returns of 7-9% a year over the five years.
Tax-exempt bond financing is also expected to continue to provide the lowest cost means of financing apartment investment opportunities, and this could boost returns for some assets to 11-13% per annum, Henderson said.
Sue Motowidlak, co-portfolio manager for CASA V, said: "We are very pleased to be growing our multi-family platform further.
"It is exciting to be able to be an active buyer at this point in the cycle. Unlike the period of the '80s and the early '90s, this time around multi-family is not overbuilt.
"The overall economy will improve and, in most markets, multi-family will recover quickly."
Jay Martha, fellow co-portfolio manager and head of Henderson's North America property business, said: "Henderson's CASA fund series has been very well received by investors, having successfully invested, operated and liquidated through all points in the investment cycle.
"In 2010, transaction activity has allowed Henderson to successfully invest its equity in CASA IV in quality assets for its investors.
"The concurrent closing of CASA V will place Henderson in a strategic position to take advantage of the team's active transaction pipeline."