Funds round-up The real estate capital raising market continues to be nursed back to normality. It is not yet fully recovered, but the growing number and variety of successful launches suggest it is moving in the right direction. Richard Lowe reports

The recovery in the real estate capital raising market has been a gradual one. With each passing quarter, it becomes apparent that an ever increasing body of institutional investors are putting their faith in what are perceived to be the best managers available in the post-crisis market. While the number of funds successfully launched in February and March this year pales in comparison to the numbers seen in 2005 and 2006, it still reveals an industry on its gradual return to rude health.

Previous months have seen a large number of joint ventures. There have been two recent notable examples: Allianz Real Estate stumped up €400m in a €470m joint venture with AMB Property Corporation to invest and manage logistics assets in the euro-zone; and the first and second Swedish national buffer funds AP1 and AP2 are to set up a €1bn joint venture company to invest in European real estate. It will be managed by Catella. Both sets of institutional investors have historically shown a preference for direct means of real estate exposure over indirect investments through funds.

But the investment market has been replete with successes on the indirect front. A notable example is GE Capital Real Estate, which raised €240m for a Polish retail fund from global institutional investors after having established its third-party fund management business only in 2008. The company has some $73bn (€51.6bn) in real estate assets under management worldwide and has begun to open its expertise to other investors. It has proved an attractive proposition for some, including multi-managers CBRE Investors and The Townsend Group, which have both invested in the Polish fund on behalf of their clients. It also demonstrates the attractiveness of the Polish market at the moment.

“In the current economic environment, raising capital from leading third-party investors and securing financing from banks to successfully close another vehicle in Europe - the first in Poland - is a significant achievement,” said Jonathan Kern, president of GE Capital Real Estate Global Investment Management. “This fund is in line with our strategy of building a strong and successful investment management business in Europe.”

Aviva Investors was another successful investment manager. It won a mandate to establish and manage a global portfolio of real estate investments on behalf of the sixth-largest Dutch pension fund. Philips Pensioenfonds hired Aviva Investors as property multi-manager just weeks after winning a mandate from the pension fund for Dutch medical consultants, SPMS, to manage its existing global indirect portfolio.

According to press reports, Aviva Investors has also secured capital commitments from the Netherlands’ largest pension institution, APG, for a UK residential fund under development. Neither Aviva Investor nor APG would confirm the story.

But Aviva Investors could verify that it aims to launch a number of real estate-related funds as part of its Return Enhancing and Liability Matching Assets (REaLM) strategy for UK pension funds. The new multi-fund strategy, which targets long-duration assets with inflation linkages, is being devised initially for the Aviva Staff Pension Scheme in conjunction with its investment advisers, but Aviva Investors intends to roll it out for other pension funds. The funds will each offer access to a number of asset classes, which might include infrastructure and real estate loans, and could be launched in a matter of months.

Partners Group has secured a variety of mandates in recent months and continues to do so, including gaining €500m in capital commitments from a series of institutional investors for its global infrastructure strategy. Partners Group Global Infrastructure 2009 has already begun deploying capital in a number of countries. The private markets specialist was also awarded a global real estate investment mandate from Swiss investment foundation Pensimo Management. The strategy is to focus on value-added and opportunistic investments, including secondary fund transactions. This move marks a departure from Pensimo’s usual focus on core property.

Appetite for value-added investments also manifested itself in Germany where Corestate Group raised fresh capital from new investors for its fund that targets secondary properties in Germany. The fund, originally launched in 2006, now has approximately €160m to deploy in special situations. Other successes in Germany includes DIC Asset’s first real estate special fund, which raised €120m from institutional investors to invest in German offices. Another German special fund, this time focused on commercial properties in Paris, raised €250m. IVG Institutional Funds described it as a club fund because the number of investors is limited to six.

TAN-EU Capital, the investment firm set up recently by Rachel Renucci-Tan, also describes its new €280m joint venture with Chinese developer Shui On Construction and Materials (SOCAM) as being the first “club vehicle” of its kind to be raised in the Asian region. SoTan China Real Estate I will invest in “special situation” real estate projects developed by SOCAM in high-growth, second-tier cities in China. Both joint venture parties will be providing half of the investment capital.

Composition Capital is still deploying capital in Asia for its fund of funds vehicle focused on the region, but its European offering is now fully invested. European director Maarten Vermeulen told IP Real Estate that the firm was likely to launch a new European fund of funds this year and it is currently talking to investors about what they would be looking for in a new product. Meanwhile, investment manager UFG-LFP has entered the European property fund of funds sector. UFG is 80% controlled by Crédit Mutuel Nord Europe and is open to subscriptions until the end of the year.

Invesco Real Estate continues to attract institutional capital for its European hotel strategy, a sector that has otherwise been fairly quiet. The fund manager achieved a first close for its second pan-European hotel fund after fully investing its first fund last year. The €85m in capital commitments is much less than the €350m secured for the first fund, but Invesco said it intended to raise more equity in the future.