AIG Global Investments displays commitment to emerging European markets with the launch of an opportunistic fund
New York-based insurer and financial services group AIG Global Investments is placing its faith in Europe’s emerging real estate markets with a $1bn opportunistic fund.
Mark Burton managing director at AIG Global Real Estate Investments (Europe) managing director said: “We are targeting Estonia to Portugal but focusing on specific countries like Greece, Poland, Estonia, Italy and Germany. The fund is not going for the typical trophy office buildings in, for example, Madrid or Barcelona. I think the western European markets are definitely maturing, so opportunity funds need to go elsewhere.” The fund, the first major vehicle of its kind to focus on these new markets, is designed to make a 20% return for investors after fees and expenses.
By sector, AIG is favouring Athens offices, Estonia’s office markets, Polish inner city retail, Italian offices and retail, plus German offices and residential. According to Burton, the exit time frame for investors is four to five years and the fund is being marketed to US pension funds and some European – including the UK – and Asian and Middle Eastern investors.
Steady European economies
AIG is confident that the region’s property markets will continue to perform well. “Europe is not going to be immune to the US slowdown. It will have some effect but essentially the European economy is pretty steady. And for this fund, the potential is in the newer countries,” said Burton. He plans to establish joint ventures with local partners . He has already set one up with the European subsidiary of Shurgard Storage Centers and up to three more partners have been lined up but details have yet to be finalised. Development projects will form part of the fund’s strategy as there is a shortage of modern office property in most of the target countries.
Simultaneously, AIG is raising two more funds that will invest in the Asian and Latin American property markets. The company hopes to source $350-$400m of equity for the European and Asian vehicles, and $250m for Latin America. Leveraging of the funds will vary but AIG plans 75% for the European vehicle. The Americas fund will close by the end of June, while the European and Asian ones will close later this year.
American International Group traces its history back to Shanghai in 1919. The insurance and financial services group has a global network of businesses in 130 countries, with assets of $303bn. The property company is part of AIG Global Investments Group, which is in turn part of the financial services division of the company.
