Italy’s Prelios is launching its first real estate fund in Germany.

The investment manager said the closed-end fund would look to raise €280m from German and international institutional investors.

It will also offer a separate-account arm focused on Germany to investors.

Nico Tates, head of investment management at Prelios, said the fund would invest exclusively in underperforming properties with upward-potential.

The new fund will invest at least €20m at a time with a core-plus strategy.

The fund will target inner city and out-of-town shopping centres, as well as Germany’s retail parks, or Fachmarktzentren, and department stores and high-street retail units.

Western German cities and Berlin are the fund’s main focus.

“We plan to invest whenever we identify significant value-add potential through optimisation and repositioning,” Tates said.

He added that the company plans to start operations from Frankfurt early next year.

The fund will be leveraged at 35-40%.

Prelios has around €2bn in assets under management in Germany.