Aerium prepares EUR 500m Central London fund

European investment manager Aerium Finance is preparing the launch of a £200 mln (EUR 240 mln) Central London Development value-add fund to take advantage of strong demand for core offices in Central London in the next 2-3 years.

London-based Aerium, which manages roughly EUR 7 bn of assets in the UK, France, Germany, and Turkey, expects to hold the second and final close for the fund by the end of April, bringing the vehicle's total investment capacity to nearly EUR 500 mln including leverage of 50%. The fund already raised £100 of equity at a first close held earlier this year.

The move reflects a shift in Aerium's strategy in the UK, Frank Ruimy, founder and Chief Executive Officer of Aerium told PropertyEU in an interview during the Mipim trade fair in Cannes. 'The financial crisis of the past three years has pushed down yields for core assets in the UK, leading us to adopt a more value-add approach in which we buy assets in strong locations with a view to reposition them as core after full refurbishment,' Ruimy said.

The fund will concentrate on office refurbishment and redevelopment in Central London. The fund will be seeded at closing by four prime assets, the company's existing developments at 20 Cannon St in the City of London and at 49-51 Conduit St in the West End, a new project - 28 Saville Row - with a redevelopment cost of £25 mln, as well as a fourth asset in Central London with an estimated development cost of £54 mln.

The fund will have a seven-year life term and will target an Internal Rate of Return of over +20%.