Citigroup closes European real estate fund on €1.2bn

Citigroup Property Investors, the global property investment manager of the US financial services firm, has closed its European property fund on €1.2 billion ($1.5 billion).

CPI Capital Partners Europe is targeting real estate and property-related assets throughout the Continent. The private equity real estate vehicle, the firm’s first true opportunity fund focussed on Europe, will put it into competition with other large New York-based banks such as Morgan Stanley as well as private equity firms such as Blackstone. With leverage, it aims to acquire up to €5 billion of assets in total.

The new fund has a primary focus on Western Europe, such as recovering Germany, and a secondary focus on growth markets in Central and Southern Europe.

It has already made investments since fundraising began in the summer of 2005.

They include a €250 million minority stake in Deutsche Annington, the largest private owner of German residential property with a portfolio of about 230,000 leased and managed apartments. Citigroup was a co-investor alongside UK private equity firm Terra Firma, which purchased the portfolio in 2005.

It has also spent €60 million on a sale and leaseback deal with an un-named US corporation which sold seven assets in four countries.

Citigroup and its in-house investment team are backing the fund with their own commitment of €200million ($264 million). The rest of the equity has come from high net worth clients of Citigroup’s private banking arm, clients of wealth management subsidiary, Smith Barney, and a number of financial institutions mainly from the US.

CFI is headed globally by Joseph Azrack, the president and chief executive, who is considered to be one of the leading figures in the the global real estate money management business, an industry he hasworked in for 30 years.

Prior to joining Citigroup, Azrack was chief executive and chairman of AEW Capital Management, founder of the AEW Partners Funds, a director of Curzon Global Partners and founder and chairman of IXIS AEW Europe.

In Europe, Citigroup Property Investors is led by the former European head of Lone Star, Roger Orf, who also helped set up Goldman Sachs’ Whitehall Funds in Europe in the early 1990s. Together with chief investment officer Neil Hasson, Orf leads a 20-plus team of investment professionals.