Triumvirate seed Euro fund with Dutch office buy

River Investment Group has made the first purchase for its €1bn (£710m) European office fund by buying an Amsterdam office building let to German insurer DAS.

The company, led by David Reuben Jnr, Stephen Benson and Jacob Lyons all three of whom feature in the top 20 of Property Week’s Hot 100 poll of the industry’s rising stars has seeded the fund with the €40m (£28m) purchase of the 146,000 sq ft building in the De Hoge Karspel area of the city. The price reflected a 6.07% initial yield.

River’s RivCore I fund was launched with €250m (£177m) of equity this summer just as the credit crunch came into force. Lyons said the fund, whose size may decrease marginally as its loan-to-value ratio moves down to nearer 70%, was still on course to target returns of 6%. Lyons said this was possible because he expected property values to fall.

He said: ‘Assets are cheaper, so returns should remain approximately the same.’ He added that River was not looking for immediate returns: ‘We are investors in markets where there is fundamental rental growth.’

The fund, which is also backed by Reuben Jnr’s billionaire father, David Reuben Snr, has a lifespan of up to four years.

‘I believe the [Amsterdam] property is 20% under-rented,’ said Lyons. ‘There is an opportunity to build value.’ The office, which was sold by German open-ended fund manager DEGI, is let to DAS for a further seven years.

Lyons, a former banker at NM Rothschild, said the credit crunch had not affected River’s investment strategy. The company is in advanced negotiations to buy three Properties in London, Helsinki and Munich. The purchases, worth €200m (£142m) in total, are expected to complete during the first quarter of 2008.