Kames Capital has launched a £250m fund to take advantage of prospective sales by open-ended funds.
The seven-year Active Value Property Fund II will be ungeared and target a distribution yield of 6.5%. It has been seeded with a £50m investment from the West Midlands Pension Fund.
Philip Bach, manager of the fund, said: “There are a number of institutional, unitised funds that are subject to daily pricing.
“Come September, there may be a need for them to dispose of assets, and we see that as another opportunity to take advantage of attractive pricing.”
The fund will aim to buy “good quality secondary” UK commercial assets priced from £5m to £15m that it believes are undervalued. Negotiations are ongoing to buy six assets with the initial seed capital.
Bach said: “We are buying smaller stock sizes so we can create a portfolio that is diversified geographically and from a sector perspective.”
Kames itself runs the open-ended £409m Kames Property Income Fund, but was not one of the fund managers that had to close amid a wave of post-Brexit redemptions.
Figures from the Investment Association released this week showed property funds saw £1.4bn of outflows in June, more than any other sector, and five major open-ended property retail funds holding £15bn of equity are still closed to redemptions.
However, since the initial wave of closures at the end of June some funds have reopened and others have reduced their fair value adjustments. This week both Henderson and Aberdeen Asset Management reduced their adjustments to -3.5% and -1.25% respectively.
• To send feedback, e-mail karl.tomusk@estatesgazette.com or tweet @ktomusk or @estatesgazette
