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TH Real Estate launches flagship European Cities Fund

TH Real Estate has launched a new open-ended property fund: the European Cities Fund, guided by proprietary research on the long-term structural growth potential of European investment markets.

The Fund will invest in income-producing properties in ‘future-proof cities’ across Europe, providing diversified commercial real estate exposure. Over 200 European cities have been assessed based on soft (e.g. quality of life and technology scores), hard (e.g. urbanisation and youth population) and growth (e.g. discretionary spending and population growth) factors, resulting in a defined list of 42 cities supported by such factors and best placed to benefit from long-term growth in demand for real estate. Further to this, the research has informed individual strategies for each city such that a selection will invest primarily in retail, another selection will also consider logistics investments and the remaining will consider opportunities across retail, office and logistics. This focused approach will guide the Fund to target investments best positioned for long-term growth, and take advantage of economic drivers that will build a disciplined and diversified portfolio.  

The Fund is now open for investment, with €200m of co-investment capital having been provided by TIAA. This co-investment capital will be invested alongside a number of leading founder investors currently in due diligence. The Luxembourg Special Limited Partnership Fund has a target Fund size of €3-5bn over a five year period. Its maximum gearing will be 40% with a targeted average of 30% LTV. The Fund is in the process of assembling a seed portfolio of investments across its defined investment city universe.  

Andrew Rich, European Cities Fund Manager, comments “Following extensive research based on megatrend filters, we have identified a list of European Cities for investment, creating a unique product which will benefit our investor’s long-term goals. Our dedicated local team, with eight offices across Europe, has longstanding relationships with owners, brokers, local developers, property management firms, and lenders. This pipeline of stock combined with our extensive local experience and strong track record for origination and delivery, demonstrate the expertise and access we can offer clients.”  

Alice Breheny, Global Co-Head of Research, says “A city-based real estate strategy, underpinned by long-term, structural trends, that strikes the right balance of risk and diversification, while taking advantage of short-term pricing opportunities’ may enjoy above-average portfolio level returns, lower-than-average volatility, and modest downside risk, for long-term investors.”  

Austin Mitchell, Head of Global Business Development, comments “The TH Real Estate platform was founded to deliver products that could capitalise on Tomorrow’s World and to demonstrate our alignment with client interests via co-investment capital. By combining our innovative approach, our global perspective and our dedicated local expertise in real estate, we are excited to launch what we hope will be the first fund.”

Issued by Henderson Real Estate Asset Management Limited, 201 Bishopsgate, EC2M 3BN. Authorised and regulated by the Financial Conduct Authority. TH Real Estate is a name under which Henderson Real Estate Asset Management Limited provides investment products and services. This is for professional investors only, this publication is not intended for any person who is a citizen or resident of the USA. The value of investments and any income will fluctuate (this may be partly be the result of exchange rate fluctuation) and investors may not get back the full amount invested. Where opinions have been expressed, they are based on current market conditions and are subject to change without notice.

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