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As the US property market continues to deteriorate, research by fund manager RREEF reveals that value-added and opportunistic strategies should be treated with ‘caution’. However, desperate sellers will produce ‘attractive opportunities’ for some.
The popularity of value-added funds has declined by more than a quarter among European investors in the past year, according to an industry report. However core funds are in the ascendency while demand for opportunity funds remains stable.
AEW Europe has sold an asset in Hamburg acquired for its €759m European Property Investors fund, the predecessor to its second opportunity fund, which raised €788m last year.
The private equity real estate firm, which last year hired 10 RREEF executives, is targeting IRRs of 16% for its first value-added fund. The firm has also just refinanced a mixed-use redevelopment joint venture in New Jersey for $70m.
The Helios AR Real Estate Fund I will focus on investments in the Southeast and Mid-Atlantic US across the office, industrial, retail and related property sectors. Chairman and CEO Michael Adler said market conditions made it important to have discretionary funds available.
The US arm of ING Real Estate has closed its Clarion Development Ventures III fund, which will target all property sectors in the US, including distressed land sales.
The New York-based firm has closed its Apollo Value Enhancement Fund VII, bringing its value-added investment fund series to $2.7bn in total committed equity.
Global real estate firm Hines has closed an $828m value-added fund—its second fund targeting office properties in the US.
The Dutch institutional real estate manager is departing from its usual strategy to meet investor demands for diversification and higher returns.
Value-added funds in Europe are having an easier time deploying capital than opportunity or core funds, according to a survey released by a European trade organization.
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