TH Real Estate’s European Cities Fund has completed its first deal.

The open-ended fund acquired the Meraville Retail Park in Bologna at a net 5.96% initial yield from Orion Capital, which had held the property in its IV European fund.

TH Real Estate launched the fund, targeting European cities, in March.

The investment manager said TIAA allocated an initial €200m for the fund, for which it is aiming to raise up to €5bn by 2021.

The 35,975sqm park, which opened in 2003, is let to COOP, Mediaworld and Leroy Merlin, among others.

Occupancy is 99.7%.

TH Real Estate said that, in a rating of 1,200 European regions on factors such as employment growth, employment structure, unemployment, population growth and GDP per capita, Bologna rated in the top 12%.

Liz Sworn, fund manager for Europe, said Bologna, measured against other European cities, continued to outperform in areas such as employment, growth and GDP per capita.

“Retail sales growth in the city is predicted to average 1.4% per year in the next five years, outperforming the Italian average,” she said.

“We strongly believe in the investment fundamentals of Bologna and feel Meraville Retail Park will prove to be a strong asset for the fund.”

The fund – geared at 40% and structured as a Luxembourg special limited partnership – will aim for an average 30% loan-to-value ratio.