Aviva Investors holds final close for UK Recovery II Fund

Aviva Investors has announced a third and final close for its UK Real Estate Recovery II Fund after receiving an additional £50 mln (€60 mln) of equity commitments.

This third close for the fund brings the total to £140 mln, well below the initial target of £250 mln.

'Although there was still interest in the fund from other investors, Aviva Investors was mindful of the speed with which the real estate market is currently moving and decided that a delayed final close would not be in the interests of existing investors,' Aviva said in a statement

The fund, which launched in September 2013, is ungeared and invests in UK commercial real estate with a focus on secondary assets and targets a return of 8-10% per annum (net of fees) and a distribution yield of 6-6.5% per annum. The fund carries out intensive asset management, such as lease re-gears and refurbishments, to positively reposition each of its assets. It aims to sell assets opportunistically once individual business plans have been completed and maximum value realised. The fund has a life of five years.

'Within the fund, we have aimed to take advantage of the short-term opportunity in the pricing gap between secondary and prime real estate,' said fund manager Anna Rule. 'Since launch, investment activity has already seen the purchase of 13 assets with a collective value of £75 mln. The fund has therefore deployed a significant amount at an early stage of the current cyclical upturn, thus benefiting from attractive market pricing.'