Fidelity International is fundraising again for its UK and pan-European funds.
The UK-based team, led by Neil Cable, is targeting €200m of new capital for its €125m Eurozone Select Real Estate Fund, which was launched last year and is almost fully invested.
Fidelity also hopes to raise up to £200m more for its four- year-old, £130m UK Real Estate Fund, which invested most of its capital in 2009/2010 and has recently focused on asset managing its stock.
Chief investment officer Adrian Benedict said: “Our ambitions are the result of where we are in the cycle, in a dislocated market, with spreads between prime and secondary property at an all-time high.
“Our strategy has been to focus on second-tier towns such as Nottingham in the UK or Lyon, Toulouse or Stuttgart, and high-quality real estate – the kind of thing that UK institutions used to be perfectly comfortable buying.”
Benedict said the long-term return target for the ungeared funds is 8-10% “and we’d rather lock into high-quality income than buy for future rental growth”. He said the UK Real Estate Fund “has had a stable distribution yield of 7%”.
Fidelity is talking to UK pension funds about investing in the UK fund and to both European and Asia Pacific investors about Eurozone Select.