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Catella APAM’s RIM’s pan-European fund gears up for UK investments

€4bn firm is expanding portfolio of open-ended fund it hopes will be €1bn within three years

Catella Residential Investment Management is gearing up to deploy capital from its latest pan-European fund into the UK for the first time, despite the challenges of Brexit and the impact of Covid-19 on the region.

Catella’s UK investments are led by subsidiary Catella APAM, with the Swedish group taking a 75% stake in APAM in 2018 as a means of bolstering its presence in the region.

The €4bn Berlin-based subsidiary of the €14.5bn Swedish firm Catella Group is currently in asset raising mode for its latest open-ended residential fund, Catella European Residential fund III, which launched in March 2019 and currently has €260m in AUM. This should rise to €400m by year end and the firm hopes to be at €1bn over the next three years.

The fund is currently invested in six countries – the Netherlands, Belgium, Germany, France, Denmark and Austria – and has deals in the pipeline to expand further in these jurisdictions. It has a core, core-plus strategy and a target return IRR of 5%-6% a year.

Alongside the UK, where the firm is already active with several other vehicles, the fund will also look to expand its portfolio to countries including Finland and Spain as opportunities arise.

“We’re working with [Catella’s] their residential team to deploy capital into the UK at the moment and various other funds in terms of their UK strategy,” William Powell, executive director at Catella Apam, told REFI Europe.

Catella APAM also deploys capital on a co-invest basis for institutional investors, private equity groups and high net worth individuals, mainly from oversees. During the pandemic the UK firm has seen an increase in demand for UK real estate.

“All our private equity clients are very keen to invest back into the UK and are very active looking at various opportunities, both at the equity and debt level and opportunistic capital, but also core plus capital,” said Powell. “There are some clients who are simply not willing to invest until there’s some certainty around Brexit, which hopefully we’ll have shortly, and then there’s other clients who think that actually there’s already a discount built in, both in terms of the pound and also yields that they can achieve.”

Catella’s acquisition of Apam included Simon Cooke, executive director, and Powell retaining a 25% shareholding on a five-year service contract until 2024. The partnership helps Catella bridge into the UK market while Apam gained the Swedish firm’s client reach, Powell added.

Powell, a former director at €1bn London-based Close Brothers’ property investment division, believes there are good opportunities for firms the size of Catella Apam due to their ability to be more nimble than bigger players. The current market uncertainty has highlighted difficulties for large scale real estate firms in terms of repositioning and restructuring their portfolios, he added.

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