Pan-European property fund manager Cordea Savills has launched the UK Property Ventures I Fund, a pre-seeded fund with a £200 million ($400 million) target.
The fund will focus on non-traditional areas of the market that have been targeted for intense development by local authorities. According to the firm, the fund will look to acquire land which can be converted into higher value residential use or other uses. The fund will also seek out development situations in mainstream and non-institutional sectors such as nursing homes, social housing or mixed-use sites, as well as value enhancement situations which could involve the longer term piecing together of development sites, the creation of value through lease surrenders, or the acquisition of partly-let or vacant buildings. The fund is targeting a per annum return of 20 percent.
The Fund is being seeded with a portfolio of 16 sites which extends to over 7,600 acres of land allocated for development by local authorities, mostly located in the Thames Gateway east of London, an area targeted by the government for extensive growth.
George Tindley, director at Cordea Savills, said in a statement that the fund is seeking to capitalize on the massive shortage of housing in the UK, while at the same time adopting a very specific focus. “In the face of much more challenging market conditions, UK Property Ventures number one is targeting very specific areas of the market which are less understood and therefore less competitive,” he said.
UK Prime Minister Gordon Brown recently said that one of his top priorities as prime minister will be house-building, with a new target of building three million new homes across the UK by 2020.
UK Property Ventures I follows the group’s previous funds, Serviced Land I and II, which were both fully invested ahead of schedule. The new fund has a planned life of seven years with two one-year options to extend to allow for changes in market conditions. The fund has already secured investment from two undisclosed lead institutional investors as well as co-investment from Savills.
Cordea Savills invests both directly in property and indirectly into investment vehicles, targeting both core and opportunistic plays. As June 2007, the firm managed £2.8 billion of gross assets for a range of clients including corporate, occupational and local government pension funds, fund of funds, charities and private clients. The firm has offices in London, Dublin, Munich, Milan, Paris and Luxembourg.