GLOBAL - Hermes Real Estate is to target European pension schemes looking to access the US market via a three-way joint venture with US property firm Hampshire and UOB, a Singapore bank subsidiary.
The closed-end HUH US Real Estate Income fund will invest in multiple sub-sectors, including grocery retail, medical offices and self-storage.
The acquisition focus will be on well-located and well-leased assets outside major city business districts on the east coast.
Ben Sanderson, Hermes Real Estate international investment director said: "We're looking at opportunities where there is mispricing by sector and asset size. So we're looking at assets sized below the radar of very large fund managers and above the size that would make them attractive to private investors."
The joint-venture partners have already acquired one asset from a US REIT looking to divest part of its portfolio.
Sanderson told IP Real Estate the fund would exploit a median opportunity left by a property fund universe polarised between large, domestic, open-ended funds that are not always structured for non-US investors and opportunistic funds that tend to have high fee-loads and leverage.
"We felt there was a gap in the market for a product with a modest risk profile and a focus on income," he said.
British Telecom Pension Scheme (BTPS), managed by Hermes, will be the largest initial capital contributor to the fund, with $150m (€105m).
Hampshire and UOB will each invest $25m. Hampshire will be the local presence scouting assets, while UOB will offer expertise in origination.
Asked how difficult it had been to find suitable partners for the vehicle, Sanderson said the fund manager had been holding discussions with potential partners since February 2009.
"It's time-consuming," he said. "You're never short of options when you have capital to deploy - but the right partner is hard to find."
Hermes Real Estate has £5.8bn (€6.5bn) in assets under management.