Invesco Real Estate (Invesco) has launched the Invesco Real Estate European Living Fund, an open-ended fund investing in pan-European residential assets.
Invesco said the Fund has an initial equity commitment of cEUR140 million, which with debt provides cEUR190 million of investment capacity, which Invesco intends to deploy on two initial investments.
The initial capital is from three German institutional investors, with further closings planned over the next six months. The Fund is targeting an initial EUR500 million Gross Asset Value (GAV) over the next two to three years.
Targeting a 4 per cent pa gross income return and 5.5 per cent to 7.5 per cent gross total return, the Fund has already identified its first deals in Italy and France with a combined investment volume of cEUR110 million.
“In our view the outlook is positive as the fundamentals are still good in metropolitan areas..”
“European residential investments have shown outperformance compared with other asset classes in the long-run, whilst showing less volatility and they have also proven to be especially crisis-resistant with a high degree of income stability,” says William Ertz, Senior Director – Fund Management at Invesco. “In our view the outlook is positive as the fundamentals are still good in metropolitan areas: an undersupply in main cities, long-term housing supply/demand imbalances, and an historical high gap to government bond yields.”
Robert Stolfo, Managing Director – Client Portfolio Management at Invesco, says: “We are very excited to launch this new Fund for our institutional clients who are looking to invest into Europe. Investors have an increased demand for stabilised returns and already confirmed their appetite for the residential sector’s attractive potential with a EUR140 million commitment at its first close, further capital commitments of EUR80 million are already in due diligence. Continued investment in this sector means that European residential as an asset class has seen material growth in both liquidity and scale over the past few years. This momentum is likely to escalate further as additional European countries attract inward investment.”