Sydney-based real estate fund manager Altis Property Partners has begun talking to its existing institutional investors about setting up a core-plus/value-added club vehicle predominantly targeting industrial assets across Australia.
The exact size of the club vehicle, for now called Altis Real Estate Equity Partnership (AREEP) III, has not been determined, but PERE understands that the initial capital commitment could range between A$200 million (€130 million; $181 million) and A$300 million. The fund is expected to reach a final close in the next three months, and it is understood that it also could be structured as open-ended, with the potential for future commitments from both existing and new investors.
Rather than follow the blind-pool structure of its past two funds, Altis is understood to have structured this new vehicle for a smaller number of institutional investors and is offering a more focused strategy. While its blind-pool funds have had only some industrial investments alongside office, this new fund is expected to comprise predominantly industrial strategies and potentially a smaller allocation to office.
The club vehicle is expected to target core-plus to value-added returns in the low- to mid-teens IRR overall, through investment in stabilized assets and assets with the potential for some added value. Speculative development is not expected to be a part of the mandate, although the firm could take on some development connected to existing properties and pre-leased developments.
Since the fund is expected to take on only a small number of investors, it is understood that Altis will offer co-investment rights to those investors, who are expected to be sufficiently resourced to take a more active role in the investments. Investors that the firm currently is talking to are understood to be primarily from Australia and Asia.
Altis declined to comment when approached.
With A$1 billion in assets under management, Altis manages two blind-pool funds and a separate account mandate for Australia. AREEP I closed on A$107 million in September 2010 and is now fully invested. AREEP II, which closed on A$250 million in December 2012, is understood to be 80 percent invested and is expected to be fully invested by the middle of the year.
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