TRS commits €100m to Tristan Capital

The Teacher Retirement System (TRS) of Texas has committed €100 million to London-based Tristan Capital Partners’ pan-European opportunity fund, PERE has learned.

The agreement to invest in European Property Investors Special Opportunities 3 (EPISO3) means that Tristan has neared the halfway point in its quest to raise a total of €750 million, with just over €300 million of capital commitments collected at its second closing, which is expected to be announced today.

The company is due to announce that three new investors have come into the fund. TRS is one of them. Tristan declined to identify the limited partners, however, chief executive officer Ric Lewis said: “We are pleased to add three additional investors, including major institutions from the US and Germany in this second closing. We are also experiencing a lot of interest from the US and Asia alongside our traditional European institutional investor base in the EPISO 3 Fund’s opportunistic strategy in Europe.”

The second close on just over €300 million follows a first close of €170 million announced in December. The company expects a third closing by June or July for investors currently in an advanced stage of due diligence.
Lewis added: “Capital raising is a real marathon in this market environment. It takes considerable resources, patience and network to raise capital at the present time and we are very grateful to our existing clients and emerging new investor base for supporting and investing alongside us into the opportunity we see in the current marketplace.”

The company is calling the deal environment for a higher returning strategy in Europe “the most attractive for a decade”.

Lewis explained: “In the value added investment space, we’ve completed 22 investments in the last 18 months. I feel that many of these transactions are among the best deals we’ve completed since the market run-up started the last cycle in 2003-2004. The first mover advantage of having already amassed equity and debt capital for value added investment strategies across Europe has paid off.”

EPISO 3’s mandate is to invest in western and central European markets across the office, logistics, retail and residential sectors. The fund’s strategy is to target investment returns of 15 percent net to investors with a maximum leverage of 60 percent loan-to-value.

Since EPISO 3’s first close last December 2012, it has closed on its first three investments and has a pipeline of other transactions. Most of the new capital from this closing has been earmarked for deals for which Tristan already has secured exclusivity, it said.

Lazard is acting as advisor to Tristan on the marketing and fundraising.