Aviva-owned Morley Fund Management and LaSalle Investment Management have teamed up to launch Encore+, a new continental European property fund.
Encore+ is a monthly priced and dealt, open ended fund. It will invest across the European Economic Area (EEA), excluding the UK, and aims to assemble a balanced portfolio of commercial property with a “core plus” orientation. An element of the fund will be held in property shares, bonds and cash for liquidity.
The fund has already contracted on three properties, including a shopping centre in Trier, Germany, an office park in Stockholm, and an office building in Madrid with a total value of approximately €172 million. A further €150 million of acquisitions are “in exclusivity.”
The fund follows the established governance structure of Morley’s UK and continental European specialist funds with Morley having overall fund management responsibilities, and LaSalle responsible for procurement and asset management. The fund is aimed principally at institutional investors.
“Encore+ gives investors access to the core strengths of two property heavyweights. Morley is the largest property fund manager in Europe and has more than 7.2 billion of open ended property funds under management,” explains Ben Stirling, head of European property funds, Morley Fund Management. “The extension of our open ended funds business into continental Europe is a natural progression for us. Allied to LaSalle’s strong local presence and track record across the region we believe that Encore+ will appeal to investors seeking a balanced and relatively liquid exposure to European property, with its attractive diversification and return characteristics. This new fund reflects our continuing commitment to growing our presence in Europe.”
Jeff Jacobson, regional CEO Europe, LaSalle Investment Management, says Morley is a fund manager the firm has worked with as well as competed against for a number of years. “We are very excited about working together with Morley on the Encore+ fund where we are combining the strengths of both organizations to create a unique opportunity for investors,” he says. “The fund’s first assets are a good reflection of the style of portfolio we will be creating. They offer sustainable retail and office income in good locations across Continental Europe. The immediate deal pipeline stretches from Stockholm to Madrid and includes three properties already under contract and two others in due diligence. Overall, these buildings would generate some €20 million in rent, with a blended net yield over 6% per annum.”
The fund has €160 million of equity already committed by Norwich Union Life and affiliates of LaSalle, and will be 50% geared.