Starr teams with Letterstone for €1bn Euro property venture

Former AIG head Hank Greenberg’s new firm has reportedly joined with Letterstone to create a Netherlands-based fund to buy developments in Eastern Europe.

Starr International, the investment firm formed by former AIG CEO Hank Greenberg after he left the company in 2005, has formed a partnership with London-based fund manager Letterstone Group to launch a €1 billion ($1.57 million) fund to invest in Eastern European properties, according to a report in the Financial Times.

The Netherlands-based investment company, called LS Real Estate Ventures, would invest in development projects in Eastern Europe, specifically in Hungary, Slovakia, Ukraine and Romania. The fund would mostly buy land or property with redevelopment potential. Those acquisitions will then be developed into new commercial buildings by Letterstone.

According to the report, the fund will use an initial tranche of €100 million to acquire up to €500 million of assets over the next two years, and the fund will seek a targeted rate of return of 20 percent. The fund would have an initial term of five years.

In Eastern Europe, where demand outstrips supply in many first and second tier cities, development is seen by many as a more lucrative route for investment.