AEW Europe has bought its European retail property fund’s first Spanish asset, investing in central Madrid.

The investment manager made a forward purchase agreement on the Calle Serrano asset from a joint venture with Rockspring Property Investment Managers.

The asset is due for completion in 2017.

Marc Langenbach, fund manager, said: “As the fund’s first investment in Spain, this transaction is a welcome addition to the portfolio.

“We intend to let the unit to an international retailer during the construction period and have already had strong interest.

“Over the coming months, we will continue to expand our core high street retail portfolio in Europe’s leading city centres.”

AEW Europe launched its City Retail fund last year, focusing on top tier cities.

An initial €125m was raised from two institutional investors at first close.

The company is targeting €400m ($428m) in commitments, with leverage at 50%, giving it invest €800m to invest.

Well-located retail assets within European city centres are most likely to benefit from an improvement in the European economy, AEW Europe said. 

Consumer confidence, as well as strong demographic and urbanisation trends, are also behind the manager’s thinking.