Cornerstone launches Nordic Social Infrastructure Property Fund

Cornerstone Real Estate Advisers Europe (Cornerstone Europe) has announced it is beginning capital raising for its Nordic Social Infrastructure Property Fund (NSIPF), a new core fund tit is planning to launch to invest in public real estate assets let on long term inflation-linked leases to government or quasi-government tenants.

This is the group's first capital raising for a new European core fund since Cornerstone Real Estate Advisers acquired Protego Real Estate Investors in January 2010. Cornerstone Europe is seeking to arrange a first close for NSIPF at the end of the first quarter of 2011, with a target capital raise of about EUR 250 mln equity. Once that initial equity has been deployed NSIPF will target a further EUR 250 mln, bringing the total to EUR 500 mln.

The geographical focus of the fund is Sweden, although the fund may invest up to 20% in Finland, Denmark and Norway. The target distribution for the fund is between 5% and 6% per annum (net of all costs), with target returns of between 7% and 8% per annum (net of all costs). This would assume leverage at a maximum of 50% LTV, at the portfolio level.

Lars Almquist, Cornerstone Europe’s Business Development Director, Nordic region said: 'This investment proposition should be particularly attractive to those investors seeking liability matching returns. The public assets that will be secured by the fund will be let on long-term leases of between 15 and 20 years, all of which will be CPI linked and let to strong credits, typically S&P AAA or S&P AA+. The relatively high target net distributable income return should be an attractive attribute for both real estate investors as well as potentially, fixed income investors'.

Cornerstone Europe has recently recruited two senior investment professionals with detailed real estate expertise, as well as political understanding, in particular of how central and local government operates in the target markets. Mikael Igelström has joined Cornerstone Europe from Skandrenting where he was responsible for a portfolio of about SEK 3 bn.

Rolf Könberg has also joined Cornerstone Europe from Bamse Kompetens where he was the founder and senior advisor. Prior to that Könberg was head of Urban Development at Centrumutveckling.