Tristan’s new value-add fund gets off to flying start

The €950 mln value-add, opportunity fund that Tristan Capital Partners closed earlier this year will be at least 50% committed by the end of its first 12 months, the company’s CEO Ric Lewis told PropertyEU.

‘We’ve raised the capital and because of our head start, we’ve got a good piece of the equity out and working. The fund is already 40% committed and I think we will have committed 50% plus by the year end.’

He added that this was a conservative estimate. ‘I’d like to be more bullish based on what I see in the pipeline and the speed with which we have been able to deploy capital intelligently and effectively. But the rate of deal flow could slow down and we’re not going to invest a penny before it makes sense.’

Earlier this year, the pan-European real estate manager capped the final equity raise on its EPISO 3 value-add/opportunistic fund at €950 mln, exceeding its original target for fundraising by 25%. At the time, the company said it had almost €500 mln of unfilled demand for the fund. Asked whether a new round of capital raising was on the cards, Lewis said that there were no plans at present, but that he could envisage a scenario that the fund manager might go back to the marketplace ‘some time next year’.

US ENTRANTS
While home-grown opportunity funds have been slow to get off the ground in Europe, a number of larger US players like Blackstone, Lone Star and more recently Goldman Sachs have piled into the European market. At the same time, the number of new global investors targeting opportunities in southern Europe in particular continues to grow, causing prices in selected transactions to rise by 15%-30%.

Lewis noted, however, that such price appreciation was still relatively ‘rare’. ‘In some places, we’ve been a little concerned that the price appreciation has gone beyond the fundamentals. But across the board, we’re still seeing opportunity and things priced appropriately, assets which have what I call meat on the bone. There’s stuff we can do and there’s food to eat. It’s easier to avoid places where there are already six bidders for an asset where the price is 30% above what we would expect it to be. The crowd may have showed up there, but there are plenty of other places where the opportunity is less apparent, where assets are priced very appropriately, probably at a discount that doesn’t make sense for what it is.’