Amid increasing demand from investors, Aviva Investors is to float a new real estate investment vehicle and raise £200m.
The fund is the first of its kind for Aviva Investors, which is the UK’s largest real estate manager with around £24bn of properties under management.
It is expected to announce its intention to float on the London Stock Exchange on Tuesday, and will then list later this month.
The fund, which will be called Aviva Investors Secure Income REIT, will invest in buildings across the UK that are let to well-known tenants such as blue-chip companies in order to reduce the risk of the income being cut off if tenants default on.
These could include offices, shopping centers, and hotels and would typically be let on leases of 10 years or more, said Renos Booth, head of real estate long income at Aviva Investors.
He added: “With the FTSE at record highs and gilt rates at record lows, there is a search for yield and income. The aim is to provide that secure income through a diversified portfolio.”
Andrew Cunningham, the former chief executive of housebuilder Grainger, will chair the fund, which is targeting an annual yield of 5pc.
Aviva Investors has previously offered a similar investment package to institutions such as pension funds through its £1.9bn Lime Property Fund, which has been running since 2004.
But the move to list a new fund on the London Stock Exchange means it will be open to a wider pool of investors.
Proceeds from the IPO will be spent in the first nine months of the fund’s life, Aviva Investors said, adding that it was already in the process of buying £85m of property. It could also look for fund developments that are not yet built.