Aberdeen Property Investors announces the first closing of its second closed ended European fund of funds, Aberdeen Indirect Property Partners II (AIPP II). The launch follows the success of Aberdeen's first fund of property funds (AIPP), which was established in 2005 as the first of its kind in Europe with equity commitments of 623.5 mln. Both funds are managed by Aberdeen Property Investors Indirect Investment Management (API IIM).
Similarly to its predecessor, AIPP II invests in a number of carefully selected property funds across Europe. It aims to give investors an annual internal rate of return of between 10% and 14% net, including an annual distribution of 5%. It will be a closed ended vehicle with a life of up to 10 years following the final closing.
The fund has been structured with lead investors committing 121 million in the first closing. The target size of the fund is 600 mln. and it will take on new investors until October 2008 or until fully subscribed.
Best-in-class property funds will be identified and underwritten based on proven track records, established local relationships, seed portfolios/pipe-lines and solid fund structures. Where appropriate, the Fund may also undertake co-investments which fit with its overall strategy.
The Fund will be managed by Tomas Otterud, Deputy Managing Director of API IIM and Fund Manager of AIPP who commented: "I would describe the fund as opportunity driven but not opportunistic. We believe yields have bottomed out across Europe and as a result expect property market returns to come down to more sustainable levels going forward. We are, however, confident that double digit returns can still be achieved in the asset class through active management, joint ventures, alternative sectors and utilisation of market inefficiencies. Performance between funds is likely to diverge and consequently manager selection will be even more important going forward."
Mr Otterud added: "According to the latest available audited figures, AIPP has delivered a net annualised IRR of 18.6% since inception, outperforming its target of 10-14%, with only 46% leverage exposure and 3% development exposure. According to our performance attribution analysis the largest contributing component has been our manager selection."
Source: Aberdeen Property Investors