Sydney-listed Cromwell Property Group and its European business Valad have launched Cromwell European Cities Income Fund (CECIF) after securing commitments from institutional investors and the acquisition of a €205 mln seed portfolio comprising three Dutch assets.
One of the institutional investors is PFA Pension, the largest privately owned life insurance company in Denmark.
With an initial investment target of €2 bn in gross asset value, CECIF is a long-term, open-ended core fund targeting income returns of more than 5% and a total return of 8% from assets located in selected European cities.
The move marks Cromwell’s first major fund launch in Europe after acquiring Valad in 2015, David Kirkby, CEO Europe noted. 'The first close of CECIF demonstrates our ability to match international capital with investment opportunities underwritten by our extensive local real estate teams in 14 European countries and 22 offices.'
Kirby said the fund manager intends to grow both funds under management and the geographic reach of the platform to provide institutional investors from around the world with access to core, core-plus and value-add opportunities.
The European cities fund will invest predominantly in retail and leisure, industrial, office and some specialist property sectors in the 29 locations identified by Cromwell’s research team as cities with long-term rental growth potential and strong liquidity. 'We have researched and carefully analysed 163 European cities and selected 29 which we believe will generate sustainable, and resilient, long-term returns for investors,' Audrey Klein, head of equity for Europe, commented. 'These cities will be the future focus of the fund,' she added.
The seed portfolio comprises three prime office assets located in Amsterdam, Rotterdam and The Hague, including the 33,400 m2 Central Plaza in Rotterdam, the 8,700 m2 De Ruijterkade building in Amsterdam and the 5,700 m2 Koningskade building in The Hague. All the buildings are let to strong tenants with an average lease length of more than nine years.
Cromwell’s European fund platform manages €4 bn of real estate assets and investment capacity across its 26 funds and mandates. The platform covers 338 assets and 3,400 tenants, managed by local teams totalling around 190 people in 22 offices and 14 European countries.
Cromwell Property Group is an ASX-listed Australian REIT with €6.9 bn of total assets under management across Australia, New Zealand and Europe.