UBS Global Asset Management is to establish a £600m fund to invest in City of London and Thames Valley office property, in anticipation of an impending recovery in both markets.
The fund will invest in properties which can generate internal rates of return of 15%-17%. These will include buildings where leases are about to expire, vacant modern offices in need of refurbishment and more conventional development properties.
UBS is aiming to raise between £200m and £300m of equity, and match that sum with a similar level of debt. The closing date for initial investment in the fund will be 1 June, with a second round coming between three and 18 months later.
The company had sold its final City and Thames Valley investments by 2000, before the markets collapsed. UBS is planning to return to the markets in time for a forecast growth in office rents next year, which would be the first upturn in four years.
No properties have been acquired as yet, although Richard Tanner, Managing Director of UBS’s UK property team, said that a small number “are being looked at”.
Source: Freeman News/ Property Week