Aviva's £250m fund to buy in depressed property market

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The Independent Online

Aviva Investors, the asset management business, is set to launch a £250m fund to take advantage of the downturn in the commercial property market.

The real estate team, led by its chief executive, Ian Womack, has begun contacting potential investors for the so-called "opportunities fund" ahead of an official launch. The fund will be led by Aviva's Chris Laxton.

An Aviva spokeswoman said: "If launched, the fund would look at investing in UK commercial real estate that is attractively priced relative to long-term history. We see this as an opportunity to take advantage of historically attractive pricing and forecasts for recovery providing potential for compelling returns."

The fund would have a five-year lifespan, and is likely to invest only in existing property with secure tenants, rather than speculative developments.

It is understood that the fund would write equity cheques to purchase property, and not rely on bank borrowing. High levels of debt have contributed to the downturn in the commercial property market. Aviva is the latest in an array of firms looking to take advantage of depressed property prices. Blackstone, the US buyout and corporate advisory group, is launching a $2bn (£1.2bn) Special Situations fund in Europe.

In a big week for property, British Land, the FTSE-100 giant, reports its second-quarter results on Tuesday.

It was claimed last week that the company has been targeted by a group led by Indian magnate Lakshmi Mittal. However, it is believed that what actually happened was that intermediaries for a separate group briefly discussed the idea after missing out on purchasing a stake in Broadgate, British Land's famous estate near Liverpool Street station in London.

A source close to the intermediaries said that the idea of buying British Land, which was fleetingly mentioned to the target's advisers last week, was soon dismissed after it was realised that the consortium would have to pay up to £9bn.

Analysts at JP Morgan said: "We are not going to say that takeovers [of British Land] are 100 per cent ruled out, but this looks odd to us." British Land shares closed at 512.5p on Friday, up nearly 4 per cent on start of trading. The company's market capitalisation is more than £4.2bn.

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