Russia property fund calls it quits

Stockholm-based independent asset manager East Capital Explorer has decided to close its Russian Property Fund, returning the capital back to its investors.

East Capital Explorer has closed its two-year-old Russian Property Fund, returning the capital back to its investors.

The Stockholm-based firm had yet to make an investment from the vehicle, which it started to raise in July 2008.

“As the crisis hit, our highly qualified team made a diligent decision to stay out and wait until the price fall would stabilise,” chief executive officer Kestutis Sasnauskas said in a statement. “Despite intensive efforts, it proved impossible to realise our initial investment strategy within a reasonable timeframe.”

East Capital had committed €40 million to the fund, and paid €600,000 to cover the costs of its operations. Final costs are expected to raise to €1 million.

The fund was targeting €500 million of equity and had planned to invest in commercial properties, primarily shopping centres and other retail assets in regional Russian cities with a population over 500,000. The fund, which was targeting returns in excess of 15 percent, could also have invested in the Ukraine and Kazakhstan.
Kestutis said his firm still considered real estate “attractive” and that it would continue to look for ways to allocate to the sector in the future.

Founded in 1997, East Capital is an independently-owned asset manager with €4.2 billion assets under management, according to its website.