Principal launches first long-income Europe fund

Principal Real Estate Europe, the European real estate investment arm of Principal Global Investors, has launched its first dedicated long income focused European real estate fund, unveiling a Dutch warehouse deal as its first acquisition.

Financial details for the deal were not disclosed.

The fund has a target volume in excess of €800 mln over the first five years of its life, and will invest in long leased Eurozone real estate assets, Principal said.

The fund’s first acquisition is a temperature-controlled warehouse asset located in North Amsterdam with a weighted average lease term of 20.5 years. The main tenant of the building is the Eye Film Museum.

'This is an exciting time to be entering the European long lease real estate fund market,' said Robert Leadbetter, fund manager at Principal Real Estate Europe.

'There remain relatively few competing products dedicated to the acquisition and management of long dated real estate assets in Europe, although this type of investment vehicle is increasingly in demand from investors both as a hedge against inflation and as a higher yielding alternative to bonds of equivalent credit strength,' Leadbetter added.

The fund investment strategy has been co-designed with Willis Towers Watson, to create a product that is especially suited to European institutional pension fund investors, Principal said.

The fund can acquire all types of commercial real estate with leases of at least 14 years fixed term, located throughout the Euro area, with a weighting towards Germany, Benelux and France.

Commenting on the fund’s first acquisition, Leadbetter added: 'Our first acquisition demonstrates not only that there are high quality long term income opportunities in Europe, but that with this new fund Principal is well placed to source and execute such transactions.'

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