Matrix launches European commercial property fund

Matrix has launched the Matrix European Real Estate Investment Trust, a commercial property fund specialising in Europe. It has so far secured eight properties worth 325m.

Ian Blake is a joint principal of Matrix Property Fund Management with Rob Randall. He says now is a good time for the fund, as there are more opportunities in Europe.

“In Europe, the cost of borrowing is a lot lower,” he argues. “Property in Europe at the moment provides a good return relative to cost of fund, compared with UK investments, where cost of fund is more than the initial yield. Also, the UK is lagging in terms of yield compression and capital growth potential.”

The total value of European commercial property transactions has grown in recent years, mainly because of increasing investor demand. In 2005, more than E130bn (89m) worth of transactions took place in the EU-15 countries, compared with just over E100bn in 2004, according to European property advisers CB Richard Ellis.

Blake says he will look for good-quality investments, but also ones that will provide a cash distribution. “The focus of the fund is cash distribution,” he says. “We are looking for strength and certainty of income flow.”

The Matrix European Commercial Property fund will concentrate on core property investments in the main European economies, but also has the flexibility to invest up to 25% in central European and Scandinavian countries.

“We are looking to offer a diverse European portfolio,” says Nick Hill, sales and marketing director at Matrix. “This fund will appeal to someone who already holds a UK property fund. The target yield is 7.5% a year. So if they are looking to diversify within a current portfolio and get a good income stream, this fund will be attractive.”

Eight European properties have been secured to seed the initial Matrix portfolio. The minimum investment is set at 10,000, although, for good exposure, Matrix says it would like people to consider 50,000. The initial charge is 3% and the annual management fee is about 85 basis points of the gross value of the fund. The first closing date for the fund will be June 29, 2006.