Henderson launches second central London office fund

European asset manager, Henderson Global Investors, has launched a seven-year closed ended fund designed to capitalise on the cyclical nature of the central London office market. The Henderson Central London Office Fund II (CLOF II) will be marketed to UK and overseas institutional investors and has a target annualised IRR of 12% per annum over the life of the fund.

Henderson is initially seeking to raise up to £200 mln (EUR 227 mln) for a first close by the end of 2009. The overall target equity raise is up to £500 mln. However, the manager intends to keep both the commitment and investment periods short, to protect returns. CLOF II will be managed by Clive Castle and Nick Deacon.

As Henderson plans to leverage the fund for a maximum of 50%, the fund will have a spending power of up to £1 bn.

Clive Castle said: 'The central London office market is one of the most liquid, transparent and exciting property markets worldwide. We are already beginning to see interesting assets at attractive prices, and aim to be in a position to invest ahead of the general market re-pricing expected from 2010 into 2011.'

CLOF II will focus on quality assets in good locations, with medium term secure income. The manager will favour multi-let properties and intends for the fund to be well protected from occupier risk in the short-term, but with potential for asset management thereafter.

The launch of the fund follows Henderson Central London Office Fund (CLOF), Henderson's first fund targeted at London offices, which was launched in 2004. The fund runs until 2011, but a number of properties were sold in 2007 and 2008 to crystalise their performance, and £100 mln of capital was returned to investors in December 2008. As at March 2009, CLOF was valued at £507 mln.