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Cromwell launches €2bn fund with triple Dutch acquisition

The Brisbane-based real estate firm has launched its first major European fund which will largely target retail, office and logistics assets across the 29 key European cities.

Cromwell Property Group, the real estate arm of Australian investment house Cromwell, has marked the launch of its €2 billion core European Cities Fund with the €205 million acquisition of three Dutch office assets.

In partnership with Valad Europe, the firm’s European wholesale funds business, Cromwell has launched the Cromwell European Cities Income Fund (CECIF) after securing capital commitments from institutional investors including PFA Pension, Denmark’s largest private pension scheme.

CECIF is an open-ended core vehicle, for which Cromwell will target income returns of more than 5 percent and a total return of 8 percent from assets located in key European cities. Cromwell confirmed that the amount raised at the first close was €205 million.

In tandem with the fund launch, Cromwell has also purchased a portfolio of three prime Dutch office assets located across the Netherlands for a total of €205 million. The portfolio comprises the 340,000 square foot Central Plaza in Rotterdam, the 91,000 square foot De Ruijterkade building in Amsterdam and the 579,000 square foot Koningskade building in The Hague. Cromwell said all of the buildings are let on long-term leases, backed by strong covenants with an average lease length of more than nine years.

David Kirkby, chief executive officer Europe at Cromwell, said: “This is Cromwell’s first major European fund launch. The first close of CECIF demonstrates our ability to match international capital with investment opportunities underwritten by our extensive local real estate teams in 14 European countries and 22 offices.”

He added: “This is a clear signal of our intention to grow both funds under management and the geographic reach of our platform as we scale up to provide institutional investors from around the world with access to a full range of investment themes spanning core, core-plus and value-add.”

Audrey Klein, head of equity Europe at Valad, said: “The historically high yield premium of European commercial property over sovereign debt and corporate bonds currently offers an attractive entry point for institutional investors looking for a long-term total return in excess of 8 percent.”

Klein added that Valad had researched and analyzed 164 European cities before selecting 29 that the firm believes will generate “resilient” long term returns for investors.

In January 2015, Cromwell acquired Valad Europe from New York-based private equity giant Blackstone in one of the most eagerly anticipated corporate level transactions in Europe at the time.