Chayton Capital, the London and Budapest-based investment manager, aims to raise up to €100 mln for what it says is the only regulated real estate fund dedicated to South Eastern Europe (SEE) to be launched in years.
In the firm's first interview, managing partner Tim Norman told PropertyEU's CapitalWatch that the company was currently in detailed talks with several investors over The Chayton Capital South Eastern Europe Real Estate Fund, with the prospect of more capital partners emerging.
Chayton is targeting between €75 mln and €100 mln of equity and has a pipeline of deals of worth €50 mln, he added. The opportunistic six-year fund is targeting the growth economies of Romania, Slovenia, Croatia, Bulgaria and Serbia.
The fund launch comes after a hiatus of SEE funds since the Global Financial Crisis of 2008. And while some investment funds have been raised that have invested in SEE countries, they have tended to be focused on Central Eastern Europe (CEE).
Examples include M7 Real Estate, which in April this year announced the final close of M7 Central European Real Estate Fund I at its €60 mln target, and Revetas Capital which has just closed on €226 mln for its CEE fund, Revetas Capital Fund II, as revealed by PropertyEU last week.
Bluehouse Capital is also said to be raising a CEE fund.
Though institutional fundraising for SEE has been negligible, there has however been an influx of private capital into the region from South Africa. That has been put down to 'capital flight' from the country due to its stagnant economy plus the desire by some private investors for high-yielding investments.
One of the most notable examples is New Europe Property Investments (NEPI), a Johannesburg Stock Exchange (JSE) company which owns more than 30 shopping centres in countries such as Romania, Slovakia and Croatia. In one of the biggest deals in the region, last November NEPI - which has a dual listing on the Bucharest Stock Exchange - paid €237.5 mln to buy the 62,100 m2 Arena Centar shopping centre and adjacent land in Zagreb, Croatia.
NEPI is in the process of merging with Rockcastle, another JSE-listed property company, which acquired three Polish malls for €522 mln in late 2016. The combine, to be known as NEPI Rockcastle will have €3 bn of assets under management in the CEE region.
Meanwhile, Dutch-registered group Echo Polska Properties - backed by South African REIT Redefine Properties - raised €100 mln of South African capital when it listed on the JSE last September, and in April this year raised a further €150 mln on the exchange.
While South African capital has acquired many of the best assets in the region, Chayton is investing in non-core real estate. Chayton was established in 2006 and is run by founder David Allen (pictured), as well as Norman – who joined in 2016 having previously managed Europa Capital’s €164 mln Emerging Europe Fund. A third partner, Bryan Train, manages the firm’s renewable energy fund business. It has offices in London and Budapest.
The Chayton Capital South Eastern Europe (SEE) Real Estate Fund follows two previous real estate funds raised by the company, one of which has been exited and the other still being wound down. Chayton Duna Property Fund closed in 2007 on €115 mln, and the Chayton Sava Property Fund closed in 2008 on €135 mln. In 2010, the firm also took over the management of €50 mln Black Sea Enhanced Returns Fund at the request of investors.
Norman explained that while it has launched a fund, Chayton is also keeping an 'open mind' if investment partners preferred to invest in SEE directly on a deal-by-deal basis. Stephenson Harwood are the fund lawyers, while Grant Thornton is the tax advisor. Trident, Heritage and Intertrust are fund and corporate administrators.
