AEW UK fund gets first commitment

AEW UK, part of the Paris-based real estate investment manager, AEW Europe, has scooped a cornerstone investor in the shape of a large pension fund advised by The Townsend Group.

The commitment is a significant step as AEW builds a platform in the UK, beginning with its first offering, the AEW UK Core Property Fund, which will be diversified geographically and will target all main property sectors.

It is structured as a UK Exempt Unauthorised Property Unit Trust, but is intended to migrate into the a Property Authorised Investment Fund (PAIF) regime in the near future. A PAIF is exempt from corporation tax on a pool of income and gains from investment in commercial and residential property, shares in UK REITs and shares in certain foreign equivalents to UK REITs.

Rob Wilkinson, chief investment officer of AEW Europe said in a statement: “We are pleased to have secured this cornerstone investment from The Townsend Group. This launch is part of our series of open-ended core funds alongside the AEW US Core Property Trust and the AEW Europe Core Income Fund.

AEW UK’s Core Property Fund will use an “innovative new pricing mechanism”, it said, in an effort to resolve the pricing and liquidity issues that have plagued open-ended property funds. A governance committee led by independent chairman, George Henshilwood, formerly senior investment partner at consultant, Hymans Robertson, will be used to protect the long term interests of investors.  

Damien Smith, principal at The Townsend Group, said: “There are a number of compelling features which we considered in our underwriting of this investment including the alignment of interest of the management team, the quality and experience of the independent advisors to the fund and the teams’ historic track record. Given the current market conditions, we have spent a significant amount of time analysing the performance track records of a number of managers over historic periods of time which have had similar levels of uncertainty as we are seeing today. We have selected AEW UK’s Core Property Fund as one of a number of investments for a large pension fund client. The AEW UK team has firsthand experience in building high performing portfolios in similar market conditions to what we are seeing today.            

In order to build its UK platform, AEW struck a deal with a team that originally spun out of UBS bank in 2009.

That team, led by Richard Tanner, subsequently joined Arbuthnot Banking Group, but then decided to search for a specialist real estate fund management platform to merge into.

As well as former UBS Real Estate managing director, Tanner, the team consists of Rachel McIsaac, asset management director; Catherine Delplace, operations and product development director; Nick Winsley, investment director; and Dana Eisner, client management and capital raising director.

When AEW announced the deal to take on the team, Wilkinson said: “The opportunity to partner with such an experienced and successful team of like-minded real estate professionals rarely occurs, so we jumped at the chance.”