Catella flagship fund raises EUR90m in one day
Catella European Residential I (CER I), launched in 2007 as the first institutional property fund to invest specifically in residential assets across European markets, has raised EUR90 million in just one day from existing investors.
Berlin-based investment advisor Catella Residential Investment Management (CRIM) will place the capital in new segments of the rapidly growing ‘living’ sector in France and Spain and extend the fund’s geographical reach to additional markets like Austria.
The fund already invests across six European countries and is to add senior housing and micro-living/student accommodation to further diversify its existing portfolio of affordable suburban residential assets. CER I has a total AUM of EUR1.3 billion and has produced average annual total investment returns of 8.0 per cent since its inception over a decade ago.
Michael Fink, Managing Director CRIM, says: “The CER I Fund was trail-blazing when it was launched by the Catella team, because it was the first vehicle to exploit the investment opportunities in cross-border European residential markets. Now the collective Catella Residential funds represent the largest European investment platform in the broader real estate Living Sector, which could be poised to overtake offices in the near future as the biggest investment market of all. Our investors have recognised this in their rapid commitment to back the further geographical and segment diversification of Catella’s flagship fund.”
CER I has already closed on a first deal under the recent capital raise with the acquisition of a EUR17 million building, comprising 98 affordable senior housing apartments, in Reigner, a suburb of Geneva. This transaction was executed in collaboration with Paris-based BEREAL Investment Management, which will also be the property’s asset manager.
The CER I Fund’s expansion has been facilitated by Catella’s innovative portfolio risk management approach, which integrates world-renowned author Nassim Taleb’s ‘anti-fragility’ research concepts into its investment strategies.
Anti-fragility is an approach that increases the capability of a system, for example a real estate portfolio, to thrive as a result of stresses or shocks, such as market price volatility. It is fundamentally new for residential managers to integrate concepts of resiliency (i.e. the ability to recover from failure) and robustness (that is the ability to resist failure).
In European residential/living sector markets, Catella applies the anti-fragility risk analysis framework drawing on multiple inputs including, for example, the relative stability of social housing in times of crisis, where a property continues to generate steady cash-flow because rents are still affordable with smaller incomes. Or the ‘ripple effect,’ where outlying regions are later to catch up with price changes in cities setting a market’s tempo – for example, Amsterdam versus the southern province of Limburg in the Netherlands.
Fink, says: “Integrating Taleb’s anti-fragility concepts into our investment process enables us to gain a greater insight into the risks associated with real estate investment. This clarity helps us to address market distortions arising from the high demand for residential investment, which is being fuelled by factors such as urbanisation, ageing demographics and a long period of historically ultra-low interest rates.”