Europa Capital starts new core-plus strategy for Mitsubishi

London-based fund management group Europa Capital has begun to invest in core-plus real estate in Europe on behalf of its ultimate parent Mitsubishi Estate, which owns Europa Capital through its US subsidiary Rockefeller Group International.

Its first deal for its parent is a 22,000 sqm multi-let office building in Unterföhring near the airport to the north of Munich, bought in an off-market transaction from Ekistics Property Investors 1LP, a value-add private equity real estate fund. The property, constructed in 2003, is currently 88% let to a diverse tenant base at rents below market levels and offers reversionary potential, said Europa Capital. This reflects the tone of the wider Munich office market, which offers significant rental growth prospects due to the current significant supply/demand imbalance.

For Europa Capital, this is a core-plus investment on behalf of the Japanese company, and as such a deviation from Europa Capital's more usual strategy of focusing on value-add and slightly riskier investments requiring active asset management to improve its properties.

Europa Capital said the drive to invest and diversify into overseas markets on behalf of Mitsubishi Estate was focusing firstly on Germany's bigger cities and would then look at other core European markets. It will look to also bring in other third party investors once critical mass had been achieved, it said.

Nic Fox, partner at Europa Capital and head of its German operations, said: “This off-market acquisition marks the beginning of a new product line in a lower risk area from our pan-European value-add funds. We strongly believe in the continuing performance of the German economy and property market and intend to assemble a diversified portfolio, attractive to institutional investors”.

Europa Capital has collectively raised 9 real estate funds since 1995 and committed to over 105 transactions totalling more than €9.5 billion across 19 European countries.