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EUROPE NEWS: Aviva closes in on $500m fund


There is no question it is taking longer to raise funds at the moment – 400 days to quote from a recent report by Cleveland-based adviser and investment manager, The Townsend Group. So, it is always heartening to hear of funds that are nearing a first close.

That is the position of a global recapitalisation fund that was launched by London-based Aviva Investors months ago into an extremely difficult fundraising market. Sources suggest this fund is now nearing a first close.

With a stated aim of corralling equity of at least $500 million, marketing materials highlight that the recap fund will “provide investors with the opportunity to capitalise on real estate investments at attractive values, with sellers that are in need of liquidity or additional capital”. The fund will look at recapitalisations and secondary opportunities, but it also has the flexibility to invest in real estate directly, according to those familiar with the strategy.

Aviva Investors, the property investment arm of the world’s fifth largest insurance company, has £20 billion (22 billion; $31 billion) in real estate, including extensive holdings in Europe as well as a growing presence in North America and the Asia-Pacific region. The firm declined to comment, but it is thought to be targeting all countries, involving Aviva real estate professionals and entities in different jurisdictions.

As PERE reported last month, more than 30 fund managers are believed to be in the process of trying to raise rescue capital for their investment vehicles. For example, PCCP, the Los Angeles-based firm, 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 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.