Aviva Investors, the global asset management business of UK insurer Aviva, has sold its UK Real Estate Recovery Fund II to Standard Life Investments Property Income Trust for £165 million (€218 million; $237 million).
The fund was launched in September 2013 targeting £250 million, but held a final close on £140 million in March 2014 because a delayed final close “would not be in the interests of existing investors, Aviva said at the time. The London-based firm wanted to put the capital to work as quickly as possible.
The ungeared fund invested in 22 individual assets, predominantly in the office and industrial sectors in London and the South East.
The fund originally targeted a return of 8 to 10 per cent per annum (net of fees) and a distribution yield of 6 to 6.5 per cent per annum. The fund's aim was to sell assets opportunistically once individual business plans have been completed and maximum value realized.
However, Aviva sold the fund wholesale to the real estate arm of UK insurer Standard Life Assurance generating a total return of 18.7 percent.
“By making investments in the market expediently and picking good quality assets, we have been able to generate a good outcome for our clients,” said Anna Rule, fund manager at Aviva Investors. “Towards the end of last year, we made the decision that prevailing market conditions presented an attractive opportunity to execute an exit strategy of the portfolio after already achieving the investment target.”