AEW Europe has launched a European retail fund, targeting top tier cities.

The company’s City Retail Fund is targeting €400m ($428m) in commitments.

Leveraged at 50%, the fund will invest up to €800m. 

AEW said it raised an initial €125m from two institutional investors at first close.

The fund has made its first acquisition in Copenhagen and has a pipeline of potential investments in place. 

Marc Langenbach, director of fund management, said the fund would invest in “high-quality, income-producing retail assets” well located within European city centres the company believes are most likely to benefit from an improvement in the European economy and consumer confidence, as well as strong demographic and urbanisation trends.

As reported last month, the company has bought a German retail portfolio for a €150m opportunistic strategy it is managing on behalf of a US institutional investor. 

The investment manager acquired eight assets, taking total investments to €56.3m.

AEW Europe and local partner Kintyre Investments are seeking to build an initial portfolio of up to €150m, through single-asset investments of €5m-25m – or larger portfolio investments where the composite individual assets do not exceed €25m.

They are targeting assets in regional cities and towns in Germany with populations of 20,000-200,000.