Corestate launches its first RAIF for retail capital

The firm will target family offices and investment advisors through the new investment program.

Corestate Capital has launched a new investment program to raise capital from private investors, institutional investors, family offices and investment advisors, the firm said on Friday.

Luxembourg-based Corestate, which is listed on the Frankfurt Stock Exchange, is seeking to raise €100 million-€150 million. The Corestate European Value-add Program focuses on Germany and, secondarily, on Spain, the Netherlands, Poland and the UK.

The investment platform is Corestate’s first to be structured as a closed-end reserved alternative investment fund seeking non-institutional capital. Previously, the firm set up RAIFs for institutional clients and segregated mandates.

The fund will have a five-year investment period. The firm is targeting a 16 percent net internal rate of return for the vehicle.

Corestate has previously sourced capital from private investors for club deals or co-investments with a €1 million minimum. However, the firm was limited by a cap on the number of clients in co-investment structures, PERE understands. Through the RAIF structure, Corestate is seeking to broaden its set of investors to also include smaller family offices and asset managers, as well as to lower its investment minimum to €500,000.

“The short maturity, transparent structure and low minimum investment support the attractive investment case for multi-family offices and private banks in particular,” Boris Pauli, Corestate’s managing director of client relations, said in Friday’s statement.

Luxembourg approved the RAIF structure for regulated investment managers in July 2016, PERE’s sister publication, pfm, previously reported. Despite similarities to the Luxembourg specialized investment funds and SICARs, a key difference is that the RAIF can be set up and launched in less time because it does not need approval from Luxembourg’s financial regulator, the CSSF.

PERE understands it took just a few weeks to set up Corestate’s fund – a much faster process than the four to five months a typical fund registration requires.

The firm expects to close the vehicle by early Q4, and it has several assets in the pipeline, according to Friday’s statement. With capital from the fund, Corestate will invest in retail, office and residential buildings. The firm’s strategy focuses on “manage-to-core” assets that it can reposition – potentially for sale to institutional investors as a portfolio.

Other real estate-focused RAIFs include PGIM Real Estate Asia Core and two CapMan-managed funds – one of which is a closed-end vehicle targeting hotel and residential properties in the Nordics. The other is an open-ended offering targeting diversified properties in the same region. Another RAIF – Vesta Real Estate Fund – raised €100 million for Portuguese property and is managed jointly by investment firm Quantico and Andbank, a private Andorran bank, according to a statement. These RAIFs were all registered last year.

These RAIFs were all registered last year.

Corestate, which manages about €22 billion, runs products across the risk-return spectrum, from core to opportunistic. Last year, the firm launched its second German residential fund, PERE previously reported.