Asset manager Standard Life Investments has raised 'tens of millions' from a number of institutional investors for its European core-plus real estate fund.
Asset manager Standard Life Investments has raised 'tens of millions' from a number of institutional investors for its European core-plus real estate fund.
The addition of the North American pension fund and an Australian pension fund - SLI's first Australian client for its property business - increases the number of investors in the EUR 900 million European Property Growth Fund to almost 50.
Mark Meiklejon, investment director - real estate at Standard Life Investments , said the addition of the two inter-regional pension funds underlines the feeling that the underlying fundamentals of core European markets remain relatively robust.
Sentiment may be waning due to the ongoing eurozone crisis but, relative to bonds, pension funds are still attracted to real estate's income profile and inflation-hedging characteristics, he said.
There are still a lot of opportunities in selective core markets for investors using low leverage, Meiklejon added. 'Our focus is still very much on core, well located, well let assets with strong covenants.'
SLI's European Property Growth fund, which invests across the range of asset types and markets in Europe, excluding the UK, currently has a LTV rate of 40%. It can go up to 50%.
The fund is actively bidding on and acquiring assets. It has a 30% maximum allocation to European countries outside the eurozone, and is looking at opportunities in Scandinavia, Germany and Poland at the moment.
There is stiff competition, mostly from other traditional manager groups, for core assets in Europe, and demand is outstripping supply. Conversely, the majority of German open-ended funds (GOEFs) are dealing with liquidity issues and, as a group, have become net sellers rather than buyers. 'GOEFs are probably the one big source of core assets at the moment,' Meiklejon said.
SLI, he added, is also seeing inflows into its other European and UK funds. Recently, the asset manager has carried out several forward-funding acquisitions in the German logistics sector for various funds.
