Schroders holds £80m closing for UK fund

Schroder Property has received subscriptions for approximately £80m for its Columbus UK Real Estate Fund. The London-based platform plans to raise £500m for the vehicle, including debt.

Schroder Property has held a first closing of approximately £80 million (€88 million; $120 million) for its Columbus UK Real Estate Fund, a vehicle pursuing a value-added strategy in the UK.

The fund will be focused on acquiring assets that sit “just outside” of the “current definition of prime” in the UK, said Joe Froud, managing partner of Columbus Capital Management, part of Schroder Properties’ real estate investment and asset management business.

“We are pleased to be able to start investing at a time when our target assets are coming to the market in greater number. The recent recovery in values has largely been limited to prime assets,” he said.

The capital raised came from more than ten UK institutional investors. In total, the Schroders fund is expected to raise £250 million of equity, to be supplemented with £250 million of debt. Both Schroders and the management team have committed equity to the fund also.

Schroders has previously launched two other value-added real estate funds, Gresham Property Partners and Gresham Real Estate Fund II. The first of these funds has just sold its last asset, “crystalising” a fund return to investors of more than 25 percent IRR since its inception in 2002.

Schroders expects Columbus UK Real Estate Fund to deliver a return of 15 percent although William Hill, head of property, said: “It was not planned this way but our first close has coincided with the sale of the last asset in [our] first value-add real estate fund, which we launched in 2002. With UK property values back at 2002 levels there is some feeling of déjà vu. If we go on to achieve the same 25 percent per annum return, I suspect our investors will be very happy.”