Tristan to launch EUR 750m opportunistic fund for Europe

Real estate investment manager Tristan Capital Partners is launching an opportunistic-style fund with a target volume of EUR 750 mln to take advantage of widespread disruption in European property markets, PropertyEU has learned.

Contacted by PropertyEU, Tristan CEO Ric Lewis confirmed market rumours that the investment manager is launching European Property Investors Special Opportunities 3 (EPISO 3), the third in a series of value-added/opportunistic funds.

EPISO 3 will seek to achieve a net return of 15%-plus on behalf of institutional and high net-worth investors by investing in the office, retail, logistics and residential segments in Western and Central European markets.

The fund will invest over a four-year period and has a life term of eight years. The maximum leverage will be 60% loan-to-value.

'The European economy is likely to experience sovereign, corporate and institutional deleveraging and market disruption for the next few years. We think that this will provide the backdrop for a lucrative environment for value-added/opportunistic real estate investing,' Lewis told PropertyEU.

Lewis said the market conditions would benefit well-resourced, nimble investment managers, but many others seeking to raise equity would find it difficult to do so. 'We believe that the friction in European markets created by this rebalancing, and the resulting shortage of equity and debt capital, will result in meaningful and numerous risk adjusted return opportunities for the handful of experienced, well-connected and well capitalised investment managers able to stay the course.'

'The European property investment market is now characterised by three great interconnected cycles: the Economic Cycle; the Credit Cycle and the Real Estate Cycle. The most fruitful investment opportunities will be manufactured from the distress, dislocation and shortage of equity and debt capital that has arisen from the confluence of these cycles,' Lewis said.

Tristan’s two previous value-add/opportunistic vehicles are fully invested.

EPISO, raised in 2008, looks to be on course to meet its investment targets after successful sales of several of its assets. EPISO raised EUR 788 mln of equity, which, with leverage, gave it buying power of EUR 2 bn. The pan-European fund invested in office, retail and logistics.

European Property Investors (EPI) dates from 2004. It brought in EUR 759 mln of equity, giving it EUR 2.2 bn to invest in office, retail and logistics assets in Germany, Italy and Spain.