Aviva closes in on $500m-plus fund

The property manager of British insurer Aviva has its sights set on a first close for a vehicle aimed at recapitalising property funds and buying LP interests

Aviva Investors has set its sights on holding a close soon for a global ‘recap’ fund, according to several sources.

The property investment arm of the world’s fifth largest insurance company started out on the fundraising trail months ago for the vehicle, with a target of raising at least $500 million of equity.
According to those familiar with the strategy, the fund will look at recapitalisations and secondary opportunities, but it also has the flexibility to invest in real estate directly. To read more fund, see the November issue of PERE, out now, or click here for subscription details.

Aviva Investors is a significant property manager with a large multi-manager business and around £20 billion (€22 billion; $31 billion) of global real estate assets.

A number of other firms have been pursuing similar strategies. For example, PCCP, the Los Angeles-based company, is looking to raise $500 million for a workout and recapitalisation venture. In June, Clairvue Capital Partners, backed by Goldman Sachs, held a first close of $250 million on a $500 million fund also targeting recapitalisation opportunities.

Exemplifying the need for equity at some funds, San Francisco-based Stockbridge Real Estate Funds and RREEF both recently raised more than $100 million in rescue financing for Stockbridge Real Estate Partners II and RREEF’s Global Opportunities Fund II, respectively. Stockbridge required the financial backing of LPs to recapitalise its opportunity fund.

In RREEF’s case, the capital was structured as a senior unsecured debt facility with a two-year term and a one-year option to extend. The cash will be used to restructure and pay down debt and for property improvements.