Tristan Capital targets ‘moderate risk’ with €420m property fund

EUROPE - Tristan Capital Partners has raised €420m from institutional investors for a fund targeting segments of European real estate markets neglected by both prime and opportunistic investors.

The real estate fund manager formed in 2009 is pursuing a core-plus strategy for its Capital Curzon Partners (CCP) III fund and aims to capitalise on the middle ground in the risk-return spectrum.
 
Monica O'Neill, head of client relations at Tristan Capital, said: "An opportunistic fund needs a 20% return. At the other end you have investors who only want shiny trophy assets. There's a lot of room in the middle."

She added: "There are very few investors looking for moderate risk. But we're looking for assets that have something wrong with them - that are in need of new tenants, or rebalancing of the tenant mix, or light refurbishment. That way you can turn an asset with some slight impairment into a trophy asset."

The pan-European CCP III fund's final close attracted 13 pension funds and other European institutions from Germany, the Netherlands, Finland and the UK. 

Tristan Capital has already deployed close to 40% of the equity raised, including a €34m retail and residential complex in Germany, a €23m Glaswegian office block, and a Czech logistics Park.

The fund manager has a pipeline of further acquisitions - through exclusivity or firm commitments with property owners in France, Germany, Poland and Czech Republic - that would enable it to invest a further 25% of the capital raised.

O'Neill attributed the bias towards central European markets to a combination of macro-economic potential and market pricing. "Germany is a financial engine of the European market but its neighbours also benefit," she said.

"Investing in Poland and the Czech Republic allows us to take advantage of Germany's economic strength in markets where we can see assets priced fairly that we have the talent to correct."

O'Neill added: "Everything we do starts from macro-level analysis and its likely impact on the market, as well as on specific assets."