Credit Suisse raises €220m for European fund – Exclusive

Credit Suisse Asset Management has raised €220 million so far for its second European value-add real estate fund.

The Swiss investment bank’s Global Real Estate platform launched the fund in the early part of this year with a total fundraising target of €500 million, a source familiar with the matter told PERE. The blind-pool commingled vehicle has had two closings so far, with the second closing completed last month.

PERE has learned that a final close is being targeted for the first half of 2018. So far, most of the capital has been raised from private wealth investors but the firm is also understood to be in discussions with institutional investors, the source added.

The firm has yet to deploy any capital from the fund.

Credit Suisse is following the same pan-European investment strategy as its predecessor fund, which closed on around €250 million in 2014, and has so far exited around 25 percent of the capital invested. The firm targets value-add investments in major European cities.

Specific return expectations of this fund are not known, but PERE understands that value-add investments in the region are currently yielding mid double-digit returns.

As part of the strategy Credit Suisse has been a proponent of value-add and core-plus investments in Europe through taking on some rental and project development risks.
In a July research paper on European real estate markets, Credit Suisse noted: “Because the ECB is likely to initiate a gradual exit from quantitative easing in the second half of 2017 and in 2018, net returns will bottom out in most markets…We anticipate lower total returns for pure core strategies, because we will not anticipate additional positive valuation effect that results from a further decline in net yields,” according to the research.

Credit Suisse had €37 billion in global real estate under management as of end of 2016. Approximately half of the capital invested in the asset class comes from institutional investors while the remaining is from the bank’s private wealth clients.

The real estate platform runs a flagship open-ended global core/core-plus vehicle, which is invested in US, Asia Pacific and Europe. As of end July, the total fund size of the Credit Suisse Real Estate Fund Global was CHF 3 billion ($3.14 billion; € 2.6 billion). The firm also runs separate account mandates in the US, Europe and Asia.

Earlier this year, Credit Suisse made structural changes to its real estate platform, which now consists of three business divisions. International real estate is now headed by Francisca Fischer; real estate operations in Switzerland are led by Raymond Rüttimann, while the firm’s real estate separate account mandates and advisory business are led by Daniel Tochtermann. All three divisions report to Christoph Schumacher, who was named as the global head of real estate in February.