This article is from the Australian Property Journal archive
Franklin Templeton is looking to raise $400 million for its third Fiduciary International Real Estate Fund.
FIRE will be a private equity unlisted real estate investment vehicle targeted at Australian and New Zealand investors.
Franklin Templeton Investments Australia’s managing director Maria Wilton said the FIRE Core Plus Fund has been developed in response to investor demand.
“There is a growing demand from investors for global property funds in the lower to middle range of the risk spectrum. Our core plus strategy is to deliver long-term returns through several underlying investments.
“The structure should appeal to superannuation funds and other long term investors.
“Previous FIRE Funds have been value-added vehicles that have sought to generate returns by identifying underperforming properties in established markets, using a buy, fix and sell strategy. But the major super funds have been asking us about a lower to middle risk range strategy,” she added.
“The Core Plus Fund seeks to fill this gap by using a buy, fix and hold strategy with an emphasis on steady returns through yield as well as capital growth,” she added.
The fund will be managed by Fiduciary Trust International’s New York-based international real estate team, headed by John Foster.
Fiduciary Trust International is a wholly-owned subsidiary of Franklin Templeton Investments.
Wilton said the private equity model for international property is now a proven way for Australian investors to access international opportunities.
“Private equity real estate offers efficient diversification and lower administration costs.
“Because of the Fund structure, investors can gain exposure to a fully diversified portfolio with a smaller investment size. Diversification is broadly achieved by manager, geographic region, property type, investment strategy and time horizon.
“Reflecting our access to deal flow, we are able to select the best funds available. We focus on funds that offer alignment of interest with our investors and management skill—including skill in managing assets in a down property cycle,” Wilton said.
The FIRE Core Plus Fund will be a closed-end fund, with a first close expected during the third quarter of 2006.
Similar to the preceding vehicle, the fund intends to invest in selected unlisted real estate funds that may be located from around the world.
The previous FIRE funds, closed in December 2003 after raising $124 million from eight investors, primarily leading Australian superannuation funds.
The fund was Australia’s first private equity model to invest in international real estate, and already is fully committed on investments through nine underlying funds.
The second fund was launched in March 2005 and has so far raised $400.6 million from eleven investors and expects to announce a final close in early June 2006.
By Adam Parsons
