EUROPE - Invesco Real Estate has raised €75m from four German institutional investors, enabling it to make a first closing for its latest UK real estate fund.
The successful capital raising shows German investors still see value in the UK market, despite capital values recovering 15% since the middle of 2009.
Toby Simon, director of fund management at Invesco Real Estate, said: "Now is the right time to re-enter the UK market and access the opportunities that are available by capitalising on the expected rental growth in the London market, as well as other opportunities that exist to take on assets with slightly higher risk related to vacancy and refurbishment, where recent pricing corrections have been less aggressive."
He added: "While there has been a recovery in UK pricing during 2009 and 2010, values remain well below the long-term trend levels and, in our view, continue to offer attractive opportunities as the rental cycle bottoms out."
The money has been raised for the third in a series of 'tactical' UK funds run by Invesco, all of which have been aimed at investors located in German-speaking countries.
The four funds focused on generating income returns through investing across UK property sectors and employing active asset management.
The latest Luxembourg-domiciled fund can employ a maximum gearing level of 60%, giving Invesco approximately €180m of initial spending capacity.
This is expected to increase following subsequent closings over the next 12 months.
The fund, which has a three-year investment and a planned lifespan of 10 years, can invest across the main sectors of office, retail and industrial - in London and other strong UK locations.
Simon said: "The UK market is one of the most mature and professional real estate markets in Europe.
"This provides a good foundation for efficient implementation of asset management strategies and maximum transparency, coupled with one of the most landlord-friendly lease structures in Europe, thus providing a compelling platform for achieving the fund's investment targets and with the potential to provide attractive income returns to the investors."