Danish investment house Sparinvest Property Investors has announced the final close of its latest fund of funds on $640 million (€489 million), which will make investments in private equity real estate funds focused on the US, Europe and Asia.
Sparinvest Property Fund has already made commitments to two European-focused funds, two vehicles in the US and one in Japan. In the US, the fund has committed to RREEF American REIT II, while it has invested in UK retail fund The Mall and UBS Euro Value Added Real Estate Fund in Europe.
The fund hopes to be fully invested in 2008 with 12 to 14 fund commitments around the world.
“The considerable size of the fund will enable us to achieve a significant level of risk diversification by investing in top performing real estate funds in the US, Europe and Asia”, managing partner Bo Jensen said in a statement. “The current five funds in our portfolio provide a strong platform for the future performance of the fund. This will be further enhanced in 2007 as we expect to carefully select six additional funds, specialized within specific geographical regions and/or property sectors.”
According to Sparinvest, the fund has commitments from 11 Danish institutional investors and has a targeted annual net return of between 8 and 10 percent. The fund’s initial target was $600 million.
Fund of funds have become an increasingly common phenomenon in the private equity real estate sector as investors, primarily in Europe, look to access the global property markets via indirect investments. Last year, Aberdeen Property Investors closed a €624 million fund of funds focused on Europe while Composition Capital raised a combined $350 million for two separate fund of funds vehicles focused on Europe and Asia, respectively.