Tristan Capital set for third soft close of real estate fund

Pan European real estate manager Tristan Capital is set for a third soft close of its Curzon Capital Partners III LP fund in December, after two previous closes in June and October which have brought assets close to the target €500m.

The fund represents the third fund in Tristan’s Core Plus set, and the fifth private equity real estate fund the Tristan team, headed by chief executive Ric Lewis (pictured), has formed together.

The London-based firm focuses on deeper and more liquid markets in the UK, Western and central Europe. It characterises its approach as “active portfolio management and creative asset management”, with a proactive but disciplined approach to buying and selling assets.

The Curzon Capital Partners III LP fund first closed within three months of launch, in order to commit to five exclusivity deals. They covered the office, retail, residential and logistics sector, located in the UK, Germany, Austria, and Central Europe markets, and totalled over €250m. The Fund arranged a €200m revolving line of credit facility with RBS International as financing for its acquisitions.

At the second close in October, the fund had some €300m and seven deals in the pipeline, with new investors coming in from France and The Netherlands. Further investors are likely to complete due diligence processes in time for the third close in December.

The strategy aims to take advantage of the “core-plus gap” that in-house research has identified between opportunistic and core investment strategies. The firm believes core strategies have become crowded as institutional capital seeking low risk, conservative investments for real estate allocations has pushed up values and depressed yields in prime markets across Europe.

Lewis, the former CEO for Curzon Global Partners, added: “We believe a core-plus investment strategy will be a target-rich opportunity in Europe over the next couple of years…the challenge, and the opportunity, is to sort through the large volume of possible core-plus investments for those which possess significant potential for value enhancement by active asset management, and also have the highest likelihood of attracting institutional buyers as the economic cycle advances and improves across Europe.”

The fund has an 11-12% net internal rate of return, with a target income return of 4-7% annually. In addition to CCP III, Tristan also manages its value added/opportunistic fund series including European Property Investors Special Opportunities LP (EPISO). EPISO has completed on approximately €1 billion of acquisitions since 2010 and is in the midst of additional investments in Germany, France and the UK. EPISO’s investment period remains open until June 2012.

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