Cain International, the privately held investment firm led by Jonathan Goldstein, has announced the close of its debut fund in Europe, dubbed the European Real Estate Opportunity Fund I (EREO I), following investments from Goldman Sachs’ Vintage Funds and US-based Security Benefit Life Insurance Company.
Cain’s founding partners and members of its senior management team also contributed to the fund raise, which reached €324 mln in capital from its investors, €70 mln of which came from Goldman Sachs alone.
Said Richard Pilkington, senior managing director, head of European real estate: ‘Would we have liked to have secured more for the fund? Yes, but at the same time, we are delighted with the outcome. Around 15 months ago, we were in conversations with a lot of investors, a handful of which were moving forward, before the pandemic interrupted everything. But we feel we sized the fund correctly, and were delighted to hit this milestone last week with Goldman Sachs, a great name and a very exacting investor.’
Around 70% of the capital has already been deployed across several European gateway cities, including Dublin, Paris and Madrid, with a strategy in place for investing the remainder, according to Daniel Harris, managing director, head of European investment.
‘Our office portfolio has continued to perform well throughout the pandemic, so that’s an area we are interested in, but we are also focusing on expanding our residential holdings. There is a lot of talk about “beds and sheds” but we have a five-year track record in residential, so it’s a natural sector for us. And we saw from the fund raise that people want to invest with a manager that has that kind of experience,’ Harris said.
He added: ‘The pandemic may have interrupted those initial conversations, but when we resumed talks with potential investors, we were able to demonstrate that our portfolio had performed strongly through 2020, which injected a lot of confidence into proceedings. We were already invested in cities like Madrid and Barcelona, Dublin and Warsaw, in line with our ‘gateway cities’ strategy focusing on resilient investments. We anticipated back in 2018-19 that there would be a crisis somewhere around the corner, because cycles don’t last for 16 years.’
In the meantime, said Harris, the crisis year helped them add an asset in Paris – ‘with a Covid discount’ – and they are about to close on another deal with a ‘nice price’ due to the pandemic.
‘Post-Covid, investors have retrenched,’ observed Pilkington. ‘Capital wants to come down the risk curve, but also wants returns. It wants country-specific and sector-specific strategies. We were able to give that reassurance to capital that we had clear idea about the sector and our geographies of experience.’
Added Igor Ostrowski on behalf of Goldman Sachs’ Vintage Funds: ‘We are impressed by the Cain team’s ability to identify and execute on compelling investment opportunities, regardless of the past year’s turbulent backdrop.
‘We are excited to invest in a fund with an attractive seed portfolio and remain confident in the future of high-quality assets in European gateway and challenger cities. We look forward to further developing our partnership with the firm in the months and years ahead.’
