TH Real Estate has launched an open-ended property fund targeting European cities.

The investment manager said TIAA allocated it an initial €200m for the European Cities fund.

The co-investment capital will be invested alongside other founder investors, which the firm said were currently in due diligence.

TH Real Estate is aiming to raise up to €5bn by 2021 for the fund, targeting assets in 42 cities offering long-term growth.

Retail assets, as well as office and logistics properties, will be the fund’s main focus.

Alice Breheny, global co-head of research, said the fund had a city-based real estate strategy, underpinned by long-term, structural trends.

Geared at 40%, the fund, structured as a Luxembourg special limited partnership, will aim for an average 30% loan-to-value ratio.

The fund is assembling a seed portfolio of investments in ‘future-proof cities’ across Europe, having monitored and rated 200 cities for their quality of life, urbanisation and population factors.

AXA Investment Managers-Real Assets last week raised €500m for its pan-European, AXA CoRE Europe open-ended fund, reflecting a shift toward investment managers offering an open-ended vehicle.

Isabelle Scemama, head of funds, told IPE Real Estate the fund would focus on “cities and not countries”.