Aberdeen Standard Investments (ASI) has launched a new fund that will invest in the residential sector in Europe’s leading cities. The first open-ended property fund of its kind to invest in the residential sector on a pan-European basis, the European Residential Property Fund will focus on the private rented sector (PRS).
The fund has received investments in excess of €350 million from eight investors in The Netherlands, Switzerland, and Luxembourg. With further fund-raising planned, the fund is intended to grow to above €1 billion over the next five years.
The fund will target high standards of sustainability and will aim to achieve a minimum four star rating by the GRESB Real Estate Assessment, which is the industry measure of green performance. It will be managed by Marc Pamin based in Germany and supported by assistant fund managers Ed Crockett in the UK and Ole Tange in Denmark and a wider team of managers responsible for transactions, asset management and development.
Up to half of the total capital will be deployed in Germany, with the remainder invested across cities in Western Europe, including the UK. The fund will target a return of 5-7% (net of fees), with an income element of 3-4% per year. Debt will not exceed 40% (loan to value) at a fund level, with a long term target leverage of 25%.
Speaking about the situation in the UK, Aberdeen Standard Investments global co-head of real estate, Pertti Vanhanen, said: “The rental sector is already valued at more than £1tn and will grow further, with private renting set to increase by around 24% by 2022. Historically the market has been dominated by individual private landlords, but professional investors and developers are now creating quality housing stock to advance the sector and meet the needs of tenants.”
“The time is right for Aberdeen Standard Investments to launch this sort of fund. We now have the residential experience, a broad global real estate outlook, local market knowledge, and boots on the ground in 14 European offices to deliver a residential investment product targeting strong, stable returns,” he concluded.
