Tristan Capital Partners, the London-based private equity real estate firm, plans to launch a fund for making core-plus investments in European properties that borrows in structure from both traditional closed and open-ended fund, PERE can reveal.
The firm, which currently manages approximately €7.5 billion of assets in European markets, is understood to have already started pre-marketing for the hybrid vehicle and, crucially, to have garnered soft-circled commitments of more than €500 million from a small number from its existing investor base.
It is structured in a way that gives investors greater liquidity possibilities than its predecessor core-plus funds or indeed Tristan’s flagship EPISO funds, which carry a more opportunistic strategy but fewer than a traditional open-ended property fund.
It is understood that investors backing the vehicle will be subject to a three-year lock-in period in the first instance. Following that, they can request partial or complete withdrawals on a quarterly basis. The fund will run for an initial 10-year term before an investor committee will determine future activity for a following five years and, from then, every five years.
Tristan is believed to be targeting €1 billion for the fund overall and, while no hard fundraising target has been set yet, early thoughts are that it would be about €1.5 billion when it is. Tristan is believed to be approaching investors in North America, Europe and Asia for commitments to the new offering.
The launch of the fund, effectively the latest in its core-plus strategy Curzon Capital Partners series, sets a new trajectory for Tristan as it is its first perpetual fund offering. According to a source familiar with the matter, the fund’s launch comes in response to investor preferences for a fewer but bigger relationships, a desire for less re-investment risk and the increasing appetite for income-generating investments with which to match liabilities.
The fund’s strategy is in line with the firm’s Curzon funds whereby Tristan is expected to deploy capital in institutionally favored assets, located in equally institutionally favored markets, but which have a single issue to fix, for instance, a tenancy problem or a capital expenditure requirement. To date, Tristan has acquired more than €2 billion via this strategy using as much as €1 billion of equity since its inception.
The firm’s last Curzon fund attracted €466 million in equity last November and already is understood to be more than 80 percent deployed.
Beyond a different structure, this latest vehicle will have a slightly lower return expectation of 10 percent net to investors versus 11 percent to 12 percent in the prior Curzon funds. Further, its leverage cap has been reduced from 60 percent in prior funds to 45 percent.
Tristan is not thought to be using a placement agent for capital raising initially.