Investment manager Kames Capital has raised the first money from institutional investors for a closed-ended real estate fund focused on the secondary markets of the UK.
The firm announced it had closed on “founding capital” of £115 million for its Active Value Property Fund, which will run for seven years with options to extend for a further two years.
From investments made in the sub-£15 million bracket, Kames is hoping to generate returns of between 8 percent and 10 percent a year.
The firm said it believed that “outside of the prime London markets it is possible to add value for property investors by picking good quality assets, which offer attractive income returns whilst also offering good asset management potential with a view to enhancing the value of the asset.”
The fund forms an extension of Kames existing Active Value strategy which it has been running for four years. It currently manages an open-ended fund, also called the Active Value Property Fund, which is generating a net initial yield of more than 8 percent, does not include debt and which has provided returns of 8.5 percent since its inception in 2009.
Kames property director David Wise said: “There are still plenty of exciting opportunities in the secondary property market, particularly in the sub £15m sector. It is an area often neglected by large property funds and is probably out of reach for the majority of smaller commercial property investors especially now that debt for such properties is both hard to come by and expensive.’
Kames manages £52.1 billion of assets across asset classes including fixed income, equity and property for both institutions and individual investors in the UK and internationally.