Round Hill Capital, the European investment firm, has raised €200 mln for its European Residential Income Fund II.
The firm, which was founded in 2002, said both existing and new investors from Asia, Europe, and North America have commited to the strategy so far.
Round Hill added that €200 mln was not a hard target but nevertheless it was in line with expectations at this point. Target markets are Germany, the Netherlands, and the Nordics.
It is a 10-year core/ core-plus fund aiming to produce net IRRs of 8% and an average annual cash distribution of 5%.
Michael Bickford, founder and CEO, said: 'We anticipate that the Covid-19 crisis will see even greater demand for affordable and responsibly managed rental housing in key European markets.
'Residential assets are already proving to be one of the most resilient and defensive real estate sectors and we expect to announce further new investors in the near future and the efficient deployment of this equity into our significant and growing investment pipeline,' he said.
Round Hill's announcement comes as such firms cope with government regulation and the Covid fall-out, which are buffeting the sector.
Leading experts
PropertyEU recently hosted a panel discussion of leading experts in the European residential real estate sector at which it was agreed experienced investors could still make a tidy nest egg from the asset class.
Speaking at the Residential Outlook 2020 Roundtable, the closed-door debate featured heavyweights AXA IM - Real Assets, Bonard, Catella, CBRE Global Investors, Colliers, Patrizia and Trei Real Estate tackling the biggest themes surrounding the asset class.
Panellists included Allen Chilten, managing director of capital markets (Patrizia); Xavier Jongen, managing director European Residential (Catella); Gunnar Larsson, director of capital markets, Sweden (Colliers); Paul Oremus, fund manager Dutch residential fund (CBRE Global Investors); Joe Persechino, head of residential and student accommodation (AXA IM – Real Assets); Samuel Vetrak, CEO (Bonard); and Jacek Wesolowski, managing director, Poland (Trei Real Estate).
‘Today’s increased demand for residential from international institutional investors is not just from real estate investors,’ said Chilten. ‘We are seeing bond investors looking at the residential space for its similarities with bond income and the kind of yields they seek. For us, it’s key to have specialists on the ground, and over the last 36 years, Patrizia’s experts have learned a lot – new investors are still navigating the sector’s idiosyncrasies.’
‘We don’t think that the urbanisation trend is going to go away – people will still want to live in cities.’
However, the global pandemic has definitely been throwing some interesting curve-balls, raising questions about the necessity of living in prime, downtown locations for work-related reasons, Persechino added. ‘We are also talking a lot about suburbanisation, and if people will look to move further out to larger homes, with a garden or extra bedroom, if they don’t have to be in the office so much.’
Added Jongen: ‘City living in places like London or Paris arose as part of the industrial revolution – it’s where the jobs were. Further employment, services, and high-quality leisure followed. Right now, if you are living in a city like that, the restaurants and theatres are closed, the offices are empty, but you are still paying a lot. Why would you do that if you could live further out?’
Yet Oremus countered: ‘We’ve been talking about people escaping to the country for a long time – well before Covid – but it hasn’t been happening. Most people are moving into cities to enjoy amenities. We think that trend will continue.’ He added: ‘We are also a true believer in sustainability.’
Subscribers can read the whole article in the October issue of PropertyEU.
