Despite adverse market conditions, three fund managers are set to launch five large European core funds with a combined investment capacity of €7bn.
LaSalle Investment Management is preparing to launch a pan-European fund. LaSalle hopes to raise around €1bn in equity for the €2.5 to €3bn fund. The fund manager will focus on property in France, Germany, Spain, Sweden and Italy. It may also buy assets in eastern Europe.
Pramerica is raising equity for a new fund to invest in Russia and Turkey. The fund manager has asked Catella’s asset management arm, Amplion, to source and manage assets for the fund. The fund will have a capacity to invest €1bn, including equity and debt, and will invest primarily in retail and office properties. It will be seeded with an office in Istanbul it has bought for €300m.
Invesco is understood to be in the process of fundraising for three European funds, both pan-European and single-country vehicles.
The funds, which are to be launched by June, are expected to have a combined investment capacity of €3bn, including equity and debt.
However, the uncertainty in the European markets could make it hard for managers to invest the money raised. Over the past year, fund managers have struggled to find suitable assets. Both Morley, with its German Retail Investment Property fund, and Catella, with its Focus Nordic Cities Fund, have had a difficult time finding assets.
And the credit squeeze will also hinder financing the vehicles. Robert Hodges, head of European asset management at the Carlyle Group, said that although most groups have been able to raise the equity commitments, very few banks are actively lending.
“The investors that will be able to do the deals will be those that have relatively deep equity pockets and have a track record with the bank,” he said.
Tony Edgley, head of corporate finance at Jones Lang LaSalle, said that there is still some institutional liquidity and debt available for the right product. “The debt markets in Europe are not nearly as constrained as the debt market in the UK,” he said. “That said, the cost of debt has risen and banks are increasingly cautious. Therefore, it is no longer possible to go to any of the investment banks that are shifting all this CMBS paper. It is really only those with big balance sheets and German banks who are open for business, though they are being much more selective now.”
