TH Real Estate has launched a new open-ended property vehicle which is seeking to raise €3 bn to €5 bn of equity over a five-year period to acquire assets in 'future-proof cities' across Europe.
TH Real Estate has launched a new open-ended property vehicle which is seeking to raise €3 bn to €5 bn of equity over a five-year period to acquire assets in 'future-proof cities' across Europe.
The European Cities Fund's strategy is guided by proprietary research on the long-term structural growth potential of European investment markets.
The fund will invest in income-producing properties in ‘future-proof cities’ across Europe, providing diversified commercial real estate exposure. Over 200 European cities have been assessed based on a number of soft, hard and growth factors.
Per category, these factors include quality of life and technology scores (soft); urbanisation and youth population (hard) and discretionary spending and population growth) factors (growth). Assessed together, this has resulted in a list of 42 cities supported by such factors and best placed to benefit from long term growth in demand for real estate.
Further to this, the research has informed individual strategies for each city such that a selection will invest primarily in retail, another selection will also consider logistics investments and the remaining will consider opportunities across retail, office and logistics. This focused approach will guide the fund to target investments best positioned for long-term growth, and take advantage of economic drivers that will build a disciplined and diversified portfolio.
Open for investment
The fund is now open for investment, with €200 mln of co-investment capital having been provided by TIAA, the US financial institution that owns TH Real Estate. This co-investment capital will be invested alongside a number of leading founder investors currently in due diligence.
The Luxembourg Special Limited Partnership Fund has target equity of €3-5 bn over a five year period. Its maximum gearing will be 40% with a targeted average of 30% LTV. The fund is in the process of assembling a seed portfolio of investments across its defined investment city universe.
Andrew Rich, European Cities fund manager, commented: 'Following extensive research based on megatrend filters, we have identified a list of European Cities for investment, creating a unique product which will benefit our investor’s long-term goals. Our dedicated local team, with eight offices across Europe, has longstanding relationships with owners, brokers, local developers, property management firms, and lenders. This pipeline of stock combined with our extensive local experience and strong track record for origination and delivery, demonstrate the expertise and access we can offer clients.'
