Cornerstone Real Estate Advisers, one of the largest property investment companies in the world, is planning to raise a €500 million social infrastructure property fund. The fundraise is its first in real estate in Europe since it acquired Protego Real Estate Investors just over one year ago.
The firm is expected to buy properties from local and national governments as they seek alternative forms of funding in the aftermath of the global economic downturn. It said it was responding to Nordic LP appetite for low-risk alternative assets that benefit from strong cash flows.
Cornerstone wants to buy assets that are let on 15- to 20-year inflation-linked leases to government or quasi-government tenants mainly in Sweden, though the fund can invest up to 20 percent in Finland, Denmark and Norway.
The vehicle has been characterised as a core fund that should give investors a distribution of five percent and six percent per year. The leverage of the fund is envisaged as being up to 50 percent.
Two new recruits will help the fund make investment decisions. Mikael Igelström has joined from Stockholm-based property company Skandrenting AB, while Rolf Könberg has joined from Bamse Kompetens AB, where he was founder and senior advisor.
Cornerstone, owned by MassMutual Financial Group, manages around $30 billion of property. The firm broke into European property at the end of 2009 when it stepped in to buy Protego Real Estate Investors, which had a significant Nordic presence.
It is anticipated that, towards the end of January, the firm will speak with investors from outside of the Nordic region in an effort to raise more capital for the fund. It hopes for a first close at the end of March. Once an initial €250 million has been invested, it plans to raise another €250 million.
Igelström, director for Nordic investment management, said: “The timing of the launch of this fund could not be better. Investors are seeking stable and secure cash flows from their investment portfolios, while central and local governments are seeking alternative forms of funding.”