Principal launches €800m long income European real estate fund

Principal launches €800m long income European real estate fund

Principal Real Estate Europe, the European real estate investment arm of Principal Global Investors, has launched its first dedicated long income focused European real estate fund.

With a target investment volume in excess of €800 million over the first five years of its life, the Fund’s investment objective is to provide a total return that will track Eurozone CPI plus appropriate real estate risk premia through investment in long leased Eurozone real estate assets.

The Fund’s first acquisition is a temperature-controlled warehouse asset located in North Amsterdam with a WALT of 20.5 years. The main tenant of the building is the Eye Film Museum.

”The Fund will access long dated inflation linked income streams backed by investment grade credit at a time when real estate provides an attractive spread against other asset classes.The Fund has been developed to provide institutional investors with access to the relatively underdeveloped long lease real estate investment fund offering in Europe, translating a strategy that has proved highly attractive to institutional investors in the UK into Continental European markets,” said in a press release.

“This is an exciting time to be entering the European long lease real estate fund market. There remain relatively few competing products dedicated to the acquisition and management of long dated real estate assets in Europe, although this type of investment vehicle is increasingly in demand from investors both as a hedge against inflation and as a higher yielding alternative to bonds of equivalent credit strength,” said Robert Leadbetter, Fund Manager at Principal Real Estate Europe.

”Our first acquisition demonstrates not only that there are high quality long term income opportunities in Europe, but that with this new Fund Principal is well placed to source and execute such transactions,” he added.