East Capital has raised €70m for its third Baltic property fund.
The investment manager said the vehicle would invest in retail, office and logistics assets.
East Capital is aiming to raise €100m for the Luxembourg-domiciled fund, the company’s third to target the real estate sector in the Baltics since 2005.
The fund, which will focus on Tallinn, Riga and Vilnius, has an eight-year term, with a possible two-year extension.
Kestutis Sasnauskas, head of private equity and real estate at East Capital, said: “We are very encouraged by the prospects of good long-term growth in value for properties in the Baltic countries.
“High-yield, recovering rent levels and decreasing vacancy rates make the sector very attractive.”
Yield levels in Tallinn, Riga and Vilnius are 7-8% higher than in the Nordic capitals, according to East Capital.
It said recovering rents and favourable lending terms from primary Nordic banks ensured the continued attractiveness of the Baltic real estate sector.
“We are equally encouraged,” said Sasnauskas, “by the increased interest in the sector among international investors, with transaction volumes returning to pre-crisis levels.
“This is further underpinned by the stable economies, which represent the highest growth in the euro-zone, with low unemployment and low inflation.”