Rockspring has split its €650m (£523m) continental European fund to isolate investor exposure to southern Europe.
The fund manager has restructured the open-ended Rockspring PanEuropean Property Fund to create a €150m peripheral closed-ended vehicle holding around 10% of assets which were invested in four poorer performing countries. These are Spain, Greece, Portugal and Hungary.
The vehicle is only intended to have a five-year lifespan before being wound up.
The rest of the portfolio has remained in the open-ended vehicle, but Rockspring has put in place redemption gates so that only 10% of the fund – which has an NAV of around €350m – can be redeemed per year.
Its exposure is to Germany, Switzerland, France, Holland and Belgium, where the fund invests in major cities following a core/core-plus income and growth investment strategy.
The restructuring was undertaken to allow a small number of the fund’s 42 investors to exit the vehicle.
The investors are mostly UK and European pension funds drawn from 10 countries. Around a third are from the UK and a third from the Nordics, with international investors coming from Australia and Japan.
Each of the fund’s remaining investors has taken a pro rata share of the peripheral vehicle, which, according to one source, is expected to perform relatively well as the European recovery continues to spread south to Spain, Portugal and Greece
Pan-European real estate funds returned 6.3% in the year to March 2014, compared with 5.1% in December 2013. Their 12-month performance is now at its highest level since 2011.
A number of UK fund managers are also currently in negotiation with investors over restructuring vehicles, including Schroders’ WELPUT vehicle, which has a five-year liquidity window.
Investors are taking the opportunity to negotiate terms such as control provisions, fees and liquidity with managers.
Bridget.O’Connell@estatesgazette.com
