aAIM Group and Bank of Scotland launch joint venture for new £2bn European Property Fund (UK)

aAIM Group plc ["aAIM"], the property investment company, has launched a new joint venture with Bank of Scotland Corporate for a new £2 billion (approx. €2.8 billion) European Property Fund to be invested over the next 24 months. The deal also sees Bank of Scotland acquire a 20% stake in the fund management company, aAIM Group.

Bank of Scotland Corporate, part of the HBOS Group, is committing approx. €138 million (£100 million) of equity to the Fund and this is being matched by the aAIM Management team and its unique investor club of high net worth individuals including celebrities such as Sir Alex Ferguson and Sir David Frost.  With proposed gearing of 90%, Symmetry Property Fund, as it is to be known, aims to acquire a £2 billion portfolio over the next two years with a minimum target IRR of 15%. The new Fund will concentrate on investing in [commercial property] in Western and Eastern Europe, as well as the UK.

aAIM Group manages the current aAIM portfolio which is worth approximately €550 million (£400 million) after a series of disposals in the UK this year. The management team led by Chairman, Mark Tagliaferri and Chief Executive, Robert Whitton, and Investment Director, Stuart Le Gassick, own close to 50% of the aAIM portfolio. The three founded aAIM in January 2003 to promote a more sophisticated and innovative approach to real estate recognising the rapid integration of the property market and other capital markets. aAIM has completed over €1.38 billion (£1 billion) of commercial property transactions in the UK and Europe to date.

aAIM Group Chairman, Mark Tagliaferri, commented "This joint venture with Bank of Scotland marks the next step in aAIM's rapid evolution from a start up three years ago to one of the UK most successful private property companies and is recognition of the reputation we have gained in the market place as astute stock selectors and financial innovators".

aAIM, launched in January 2003, initially concentrated on buying "property bond" deals (prime properties let to investment grade tenants on long indexed leases) in the UK and they have benefited from large yield compression as demand for this stock has soared.  As a result aAIM has exited from a number of UK investments and delivered over 100% IRR to its investors.

aAIM is still investing in selected 'opportunity buys' in the UK but its focus is now in European markets.  aAIM Europe was launched last September and has commenced a € 1 billion retail- led acquisition programme across Eastern Europe.

Robert Whitton, CEO of aAIM commented: "We invest in commercial property not just for income and capital growth but for a positive yield arbitrage, optionality of ownership and value enhancement through financial engineering and structuring. We will move in and out of markets, sectors and jurisdictions where we can optimise investment returns".

John Moran, Head of Joint Ventures at Bank of Scotland commented as follows: "This transaction reflects the way in which we continue to shape our strategy to support our real estate customers. Through this newly created partnership we are providing a significant cornerstone equity commitment for aAIM, an existing customer with a proven business model. The establishment of the Symmetry Fund allows aAIM to take another step forward as a real estate fund manager and as a geared fund will allow Bank of Scotland to provide structured and tailored debt funding for underlying investment opportunities."

Source: Citigate Dewe Rogerson

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