Tristan set to go head to head with AEW

As EPISO reaches full investment, Ric Lewis could compete with former employer on new funds

AEW Europe and Tristan Capital Partners could be competing to raise opportunity funds later this year.

The two fund managers currently work together managing the European Property Investors Special Opportunities fund (EPISO), the second in a series which was launched when Tristan’s chief executive Ric Lewis still worked at AEW Europe. But EPISO is close to full investment of its €788m of equity, freeing both managers to pursue independent strategies.

After Lewis left AEW in 2009 his new firm raised a core-plus fund, partly because it would not conflict with EPISO. Monica O’Neill, a partner and head of client funds at Tristan Capital, said: “Neither of us could have rolled out a new product that looked like EPISO.”

Lewis kept the right to both the EPISO fund series name and to Curzon Capital Partners (CCP), which is the name of Tristan’s core-plus vehicle. “If the market conditions are right, our intention would be to come to market with EPISO III before the end of this year,” O’Neill said.

AEW Europe recruited Russell Jewell last year to head the firm’s private equity real estate business. Jewell said: “AEW has a successful series in the US called AEW Partners, which we will replicate in Europe and which will be called the AEW Europe Partners funds.

“They are a bit more opportunistic than perhaps the investment strategy was in our previous private equity funds, inasmuch as they focus on mis-pricing of risk in assets – taking letting and development risk and restructuring through debt,” he added.

Jewell said that although AEW believed there would be “a lot for opportunity funds to do”, the manager would “keep our funds relatively short – six years rather than eight – and our target fund size to €350m, with a focused strategy”.

AEW has set aside €35m of co-investment capital. The first fund is targeting a 17% internal rate of return and is being marketed to investors. Jewell said, “We are seeing more moving up the risk curve; two years ago it was all core, core-plus. People are reading the opportunity.”

Eight of the 13 investors in Tristan’s fund, CCP III, which raised €420m of equity in under a year, are repeat investors, from Germany, the UK the Netherlands and Finland. New investors from the USA and Singapore came in at the final close last month. O’Neil said CCP IIII would be two-thirds invested by the summer.