Invesco Real Estate has expanded its flagship pan-European property fund after taking in a €61m commitment from two new investors in February. One is a Dutch fund, which has helped broaden the open-ended vehicle’s previously German and UK investor base. The core/core-plus vehicle was launched in November 2008 with €50m of equity from two German investors.
In a second closing last July, Invesco raised a further €55m from three UK and German investors: a savings bank, fund of funds, and a pension fund. The fund has now raised more than €190m from nine investors. Simon Redman, Invesco Real Estate’s head of business development, said the fund recently drew down most of the capital, spending €80m last month on 13,900 sq. m Munich office building Renaissance House and two Madrid logistics buildings totalling 35,000 sq. m.
The fund’s first buy was Lyon office block City One, for €60m “It wouldn’t surprise us if more of our investors increased their commitments; we have a pipeline of people working on due diligence,” he added. US-owned Invesco’s European team has also raised $120m at the first closing of US Fund IV, a closed-ended vehicle for four European investors targeting the US.
The investors are a mix of new and existing clients. The European business now manages €4.7bn of assets. Redman said: “Raising money is still difficult. This fund took time because the US is behind the UK and the final signing was about recognising where the market is [in the cycle]. But we are seeing huge interest in the US from continental European investors.”
Invesco also plans to launch a second pan-European hotel fund this year, which will continue its first hotel fund’s strategy of buying mid-range properties. “This model has proved very successful,” Redman said. “We have maintained the 7.5% dividend distribution and capital values have held up.
We had about seven investors and two closings for the first hotel fund. It appeals to lots of clients because its income ” European fund that will target higher returns, at around 12-15%, is also in the pipeline.
“Some of our investors want to be higher up the return curve,” said Redman. “We see investment opportunities across Europe that would yield slightly higher returns and we have the platform in place to do that.” A third central and eastern European property fund is also on the cards, although not until the timing is right.