Deals

CBRE Investors launches €740m European fund of funds

The US property investment management firm is stepping up its European activities with two new fund of fund launches as the product gains in popularity.

-

CBRE Investors, the private equity real estate arm of the global brokerage firm, has announced the launch of two new European fund of funds and the closing of another.

The two new vehicles, which aim to raise €750 million between them, are the Richard Ellis ex-Alpha Fund and the Pan-European Alpha Plus Fund. The low risk ex-Alpha fund promises total returns of 8 to 10 percent a year and an annual divided yield of 5 percent, while the Alpha Plus vehicle promises 11 to 14 percent with a “moderate- to high-risk profile”.

The first fund is a quasi open–ended vehicle, providing annual redemptions after five years. The second is closed-ended with a 10-year life.

Both are being launched through CBRE Investors Global Multi Manager, which was formed in June this year via the acquisition of OPC, a European fund manager.

The new products are being formed as CBRE Investors announces the close of its Pan European Real Estate Fund of Funds, which raised €150 million ($193 million) of equity.

CBRE launched that product with Lisbon, Portugal-based ATRIUM Investimentos, the advisory firm specialising in non-traditional assets.

The fund is closed-ended, domiciled in Ireland and is currently invested in 12 core and core-plus pan-European real estate funds mainly focused on the retail and industrial sectors. It aims to deliver total returns of 10 percent a year over its ten-year life term and has so far invested approximately 55 percent of committed capital. A significant part of that return has been promised to investors through a bi-annual dividend payment of 5 to 6 percent.

The original investors were drawn from a pool of Portuguese institutions including the Portuguese Social Security, which has a 10 percent stake in the fund. Irish and UK pension funds were among the latest investors.

Fund of fund products are gaining in popularity because they offer investors the chance to diversify into foreign markets.

Earlier this month, BlackRock announced it was launching the Merrill Lynch European Property Fund of Funds. The followed the completion of BlackRock’s merger with Merrill Lynch Investment Managers at the end of September.

In October, Stockholm-based Aberdeen Property Investors held its first close on $91 (€72 million) for a new fund of funds focused on Asian real estate vehicles.