UK property investor launches wind fund

Tritax’s Renewable Energy Fund No. 1 will target a 15.6% annual return from wind turbine developments over a six-year period.

Tritax, the UK-based commercial property fund manager, has marked a strategic move into renewable energy with the launch of its Renewable Energy Fund No. 1.

The fund will invest in four individual 500-kilowatt (KW) wind turbine developments, and will aim for an average annual return of 15.6 percent over six years and a total internal rate of return (IRR) of 16.5 percent.

By focusing on 500KW sites, Tritax said it would benefit from “the most profitable feed-in tariff band providing the best return on capital investment”.

Development risk is being assumed by Tritax’s construction partner G2 Energy, and most of the income will be secured by a 20-year RPI (Retail Price Index)-linked contract with government.

A spokesperson for Tritax told Infrastructure Investor the firm would seek to raise money in four tranches, with a target of around £7.5 million each (€8.7 million; $11.2 million) – equating to a total fundraising of around £30 million. The anticipated closing date for the initial tranche is 20 July.

The spokesperson said that the fund was a “natural extension” for Tritax’s client base. Since 1995, the firm has acquired and developed around £1.7 billion of property assets and manages over 50 investment vehicles.

The spokesperson added that the firm would “review other sectors” but the wind turbine fund is “our priority for now”.

In a statement, Tritax partner Henry Franklin said: “Now is the right time to exploit the long term business potential for renewable energy as it moves from a niche to a more mainstream offering allowing investors to benefit from a much more “tried and tested” investment class”.

Tritax follows in the footsteps of other real estate fund management specialists to have targeted renewable energy in recent times. In September 2011, Palmer Capital launched a £52 million UK-focused solar fund; while, last year, Germany’s Union Investment and IVG Immobilien also made moves into renewable energy.