First solo opportunity fund from Tristan pulls in €170m

Third EPISO vehicle is first in series to be managed exclusively by Tristan

Tristan Capital has raised €170m from seven investors  for its first solo pan-European opportunity fund, European Property Investors Special Opportunities 3 (EPISO 3).

Chief executive officer Ric Lewis said the firm hopes to have a second closing for the fund by February and its final target is to raise up to €750m  of equity. It is targeting 15-18% returns.

Two new investors with Tristan, from the US and from Norway, came into the fund, while the other five are repeat investors, including a Finnish pension fund, a Swiss multi manager and a German insurance company.

Although it is the third fund in the EPISO stable, it is the first to be managed by Tristan alone, following Lewis’s split with his former employer, AEW, three years ago.

Lewis and a team who left after him continued to jointly manage the earlier EPISO funds with AEW after he quit and set up Tristan Capital.

He also left with the right to both the EPISO fund series name and to Curzon Capital Partners, which is the name of Tristan’s core-plus vehicle.

Lewis said about 75% of investors in the Curzon Capital and EPISO funds had invested in both products. EPISO 3’s first acquisition  is The Cube in Birmingham, which Tristan bought from Lone Star.

The 216,000 sq ft, mixed-use block was the largest asset in the Project Royal portfolio of non-peforming loans that the US private equity firm bought from Lloyds last December.

Tristan paid between £30m and £35m for the building, believed to be about half the development cost. Royal Bank of Scotland International, RBS’s Jersey company, is providing senior debt.

A second deal in Germany  is at the front of the pipeline. Tristan is one of the first private equity real estate managers to raise equity for a new generation of opportunity funds.

“That first mover advantage is a really big buying opportunity,” Lewis said. “There are fewer managers with money and who can get debt, so we  are able to secure assets and spend more time shaping transactions.”

In the past 18 months Tristan’s acquisitions team, led by Cameron Spry, has completed 20 deals for Curzon Capital Partners 3 and EPISO 3. “That tells you that on the ground, there must be things  to do,” Lewis said.