Grosvenor Fund Management has launched plans for a new flagship London office vehicle.
The investment management division of the Duke of Westminster’s property company is understood to be fundraising for the new vehicle, which could expand to a size exceeding its £400m London Office Fund I.
The follow-on fund has been launched on the back of interest from a Danish pension fund that is a key investor in the firm’s first central London vehicle.
The Danish life insurance company is thought to have signed up for a cornerstone investment in the vehicle. Grosvenor Fund Management is also expected to take a 5% stake in line with its co-investment strategy.
The group is understood to be talking to other investors ahead of a £150m first close, but would like to see the vehicle grow to £500m.
The new venture will have a different structure to its fixed-life predecessor, which was established in 1999 and won a five-year extension from investors that prolonged its life from 2012 to 2016.
This means the vehicle will have an open-ended structure, allowing it to grow over time.
It will target assets in “growing office locations” including ?Midtown and the South Bank where the firm can enhance value through active management, such as assets with short-term leases.
The group had previously investigated the launch of a second London office vehicle in 2010. However, this was overtaken by the formation of a partnership with Canada Pension Plan Investment Board in 2011 to invest more than £200m in central London offices.
Although this partnership looked at a number of assets, it was dissolved at the end of what is understood to have been an 18-month investment period without a deal being agreed.
In 2013 Grosvenor’s assets under management decreased by 22% to £3.2bn as assets sales outstripped new acquisitions. Net revenues from management fees were down to £17.7m from £23.8m as part of sales related to fund maturities.
Grosvenor declined to comment
