A Value-Add Private Equity Vehicle Targeting High-Growth Real Assets Across Southern Europe
Southern Europe Opportunities SICAV-RAIF is designed to capture transformational opportunities emerging across tourism, hospitality, logistics, residential, data centers, and broader infrastructure-connected real assets. The strategy responds to institutional and family office demand for a unified vehicle capable of aggregating value-add investment themes shaped by demographic expansion, urban intensification, and multi-cycle market dislocations. With a target annual net return of 15%, the fund positions itself to acquire discounted high-quality assets in markets where rental and capital growth remain structurally strong.
How the Southern Europe Opportunities SICAV-RAIF Is Structured to Deliver Value-Add Returns
A SICAV-RAIF dedicated to value-add real assets is generally structured to maximize deployment speed, investment flexibility, and regulatory alignment under Luxembourg law. Damalion explains how a Southern Europe Opportunities SICAV-RAIF is commonly organized to support acquisitions across tourism, hospitality, logistics, residential, and digital infrastructure.
Fund Layer: SICAV-RAIF as the Umbrella
The fund is constituted as a Société d’Investissement à Capital Variable – Fonds d’Investissement Alternatif Réservé (SICAV-RAIF) under Luxembourg law and is typically formed either as a Société Anonyme with variable share capital or as a Société en Commandite par Actions in which the share capital is held jointly by a managing general partner and the limited shareholders. The initial share capital of a SICAV-RAIF is normally set at a nominal level (often EUR 30,000 for an SA, or the statutory minimum for an SCA), with capital increasing progressively through investor subscriptions and decreasing automatically through redemptions.
Because the SICAV operates with variable share capital, each change in committed or issued capital occurs without requiring amendments to the articles of association, allowing the vehicle to raise and deploy capital in line with acquisition pipelines and value-add redevelopment schedules.
The RAIF operates under a SICAV format, allowing variable capital and rapid activation of new compartments when new value-add themes emerge. This enables the vehicle to scale quickly into sectors where pricing dislocations appear, such as distressed hotels or underutilized logistics hubs in Spain, Italy, Portugal, or Greece.
The RAIF remains indirectly supervised through an authorized AIFM, providing governance, portfolio management oversight, risk management, and regulatory reporting.
Management Layer: AIFM and Portfolio Governance
A licensed Alternative Investment Fund Manager ensures consistent execution across regions and sectors. It coordinates:
- Investment due diligence
- Risk monitoring
- Cross-border compliance
- ESG integration
- Capital call and distribution schedules
This structure gives institutional investors and family offices confidence that acquisitions, refinancing, and redevelopment phases align with EU regulatory requirements.
Asset Holding Layer: SPVs for Investments Across Southern Europe
Each investment is typically held through a dedicated SPV located in Luxembourg or the target jurisdiction. This ensures clear ring-fencing of risk and transparent accounting of project-level performance.
Practical uses of SPVs include:
- Acquiring a hotel in Lisbon undergoing ESG repositioning
- Holding a redevelopment-ready logistics facility in Milan
- Owning a residential conversion project in Athens
- Structuring a powered-shell industrial box for conversion into a data center in Madrid
This layered approach separates liabilities, supports tax-efficient repatriation of returns, and allows differentiated financing at the project level.
Capital Structure: Supporting Value Creation and Redeployment
Value-add strategies rely on flexible capital frameworks. The SICAV-RAIF usually combines:
- Committed capital from institutional investors and family offices
- Short-term acquisition financing for distressed or time-sensitive opportunities
- Development or refurbishment financing for assets requiring major upgrades
- Recycled capital through asset refinancing once stabilization is achieved
This structure allows the fund to acquire assets at discounts, reposition them, and reinvest proceeds into the next cycle of opportunities.
Illustrative Structuring Case: Hospitality + Logistics + Data Centers in One Vehicle
Damalion highlights a practical way a Southern Europe Opportunities SICAV-RAIF may structure its investment layers:
- The umbrella RAIF launches a Southern Europe value-add compartment.
- The AIFM approves three thematically aligned pipelines: hospitality recovery assets, logistics redevelopment, and digital infrastructure conversions.
- The fund deploys capital into three SPVs, each tied to a distinct project:
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an urban hotel repositioning in Barcelona
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the redevelopment of a 1980s Milan warehouse into last-mile logistics
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a powered-shell conversion near Lisbon suitable for edge data center tenants
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Investors receive unified reporting, diversified exposure, and consolidated performance metrics from the umbrella RAIF, while each project remains legally and financially ring-fenced.
This structuring approach gives investors the ability to benefit from heterogenous value-add cycles — tourism recovery, logistics expansion, and digital infrastructure — through a single regulated Luxembourg vehicle.
Why Southern Europe Offers a Unique Investment Window
Southern Europe continues to experience a rare combination of demographic resilience, tourism expansion, and asset repricing, creating attractive acquisition conditions. The region benefits from population growth pockets, accelerated urban concentration in metros such as Madrid, Lisbon, Barcelona, Milan, and Athens, and a persistent housing undersupply in coastal and metropolitan areas.
Demand for logistics and hospitality has increased sharply. Spain recorded more than 84 million visitors in 2023, surpassing pre-Covid levels, while Portugal hosted over 30 million overnight stays in the same year. Industrial vacancy rates in Lisbon, Milan, and Barcelona fell below 4%, supporting rental uplift across logistics corridors. Southern European cities also show land costs 20% to 40% lower than Northern Europe, creating significant entry advantages.
A Unified Value-Add Strategy Across Tourism, Logistics, Urban Repositioning, Data Centers, and Residential
The fund aggregates several value-add themes into one vehicle to align with investor demand. Each strategy focuses on assets positioned for operational upgrades, redevelopment, or conversion potential.
Tourism, Hospitality, and Leisure
The hospitality sector remains one of Southern Europe’s strongest recovery stories. Spain, Italy, Portugal, and Greece recorded RevPAR growth of 15% to 30% between 2022 and 2024. Many hotel owners still face refinancing constraints following the Covid downturn, allowing disciplined investors to acquire properties at discounts of 10% to 25% to replacement cost.
Practical cases include:
- Converting outdated coastal hotels into energy-efficient lifestyle properties.
- Upgrading urban midscale hotels in Barcelona, Rome, or Lisbon into upper-midscale assets to capture premium ADR segments.
- Transforming family-owned leisure complexes into resort platforms backed by institutional operational standards.
Transport and Logistics
Logistics demand continues to expand due to e-commerce penetration, population growth, and nearshoring trends. Southern Europe serves as a gateway between Africa, the Middle East, and Central Europe, strengthening demand for distribution hubs.
Key indicators:
- Milan and Barcelona prime logistics rents increased 12% year-on-year.
- Portugal’s logistics vacancy rate fell below 2% in major hubs such as Azambuja and Porto.
- Greece’s Attica region saw annual rent growth of 8%, driven by port-related logistics.
Examples of opportunities:
- Acquiring underutilized cross-docking facilities and repositioning them as temperature-controlled logistics.
- Reconfiguring obsolete industrial warehouses for last-mile delivery close to urban centers.
- Aggregating fragmented owner-occupied logistics assets into an institutional portfolio.
Building, Construction, and Real Estate Value-Add
Urban repositioning plays a central role in the fund’s strategy. Southern Europe offers aging building stock with substantial repositioning potential, particularly in city centers where demand is robust.
Practical cases:
- Rehabilitating 1970s office buildings in Madrid or Milan into modern ESG-compliant workplaces.
- Converting mixed-use assets into residential developments responding to chronic supply shortages.
- Transforming vacant retail units in Lisbon or Barcelona into flexible spaces for medical operators, coworking, or boutique logistics.
Residential and Affordable Housing
Residential demand remains structurally high due to demographic growth, tourism-related housing pressures, and limited new supply. Cities such as Lisbon, Athens, Madrid, and Barcelona face annual rent increases of 5% to 12%.
Examples:
- Converting office floors into serviced apartments for mid-term rental.
- Aggregating residential blocks to create multifamily rental platforms in growth districts.
- Redeveloping brownfield urban lots into energy-efficient housing aligned with EU Taxonomy objectives.
Data Centers and Digital Infrastructure
Southern Europe is becoming a digital infrastructure hub due to subsea cable landings, competitive electricity prices in certain markets, and supportive regulation.
Key data points:
- Spain is projected to add 400 MW of new IT power capacity between 2024 and 2027.
- Portugal’s Sines corridor continues to attract hyperscale interest following new transatlantic cable links.
- Milan remains Italy’s fastest-growing data center market, driven by cloud adoption and AI demand.
Value-add possibilities include:
- Acquiring industrial sites suitable for conversion into edge data centers.
- Redeveloping low-yielding logistics boxes into powered shells for colocation operators.
- Structuring long-term leases with hyperscale or AI-driven (Artificial Intelligence) tenants.
A Strategy Responding to Multi-Cycle Market Disruptions
Market disruptions have created a unique pricing environment. Covid reduced tourism liquidity, the Ukraine conflict reshaped freight logistics, and interest rate hikes compressed liquidity across real estate markets. Forced sales and refinancing bottlenecks have created opportunities to acquire assets with long-term fundamentals but short-term pricing inefficiencies.
Examples across the region:
- Hotels in Portugal and Spain trading at 20% discounts to 2019 valuations.
- Logistics assets in Italy repricing due to refinancing gaps, despite occupier demand at multi-year highs.
- Residential land in Greece and Spain available at attractive entry points due to developer deleveraging.
These dislocations allow the fund to acquire assets below intrinsic value while generating value through redevelopment, operational improvements, or conversion.
15% Target Annual Net Return Backed by Structural Growth
The targeted 15% net return reflects value-add levers across acquisition, repositioning, and market uplift. Historical regional data shows that assets undergoing redevelopment or conversion typically generate:
- 10% to 18% yield-on-cost uplifts for logistics redevelopments.
- 15% to 25% ADR increases after hotel upgrades.
- 20% to 40% rent growth following office-to-residential conversions.
- Above 12% rental growth in several Southern European data center corridors.
These fundamentals support long-term return generation aligned with institutional and family office expectations.
Why Institutional Investors and Family Offices Are Increasing Exposure
Institutional investors and family offices are searching for:
- Higher sustainable rental growth.
- Diversified real asset exposure.
- Inflation-resilient income.
- Simpler access to value-add strategies through a consolidated investment vehicle.
Southern Europe Opportunities SICAV-RAIF provides exposure across multiple verticals while maintaining a disciplined governance framework consistent with Luxembourg fund regulations. The RAIF structure allows rapid deployment, flexibility, and alignment with regulated AIFM oversight.
Country-Level Opportunities Across Southern Europe
Each country offers a differentiated opportunity set shaped by economic fundamentals, tourism performance, rental trends, and capital flows.
Spain
Spain remains the largest target market due to scale, tourism strength, and logistics demand. Barcelona and Madrid show rising urban rental demand, while Andalusia, Valencia, and the Balearic Islands present hospitality and residential redevelopment potential.
Portugal
Portugal combines affordability with strong population inflows and tourism expansion. Lisbon’s office-to-residential conversions generate attractive uplift, while logistics developments in Azambuja and Porto continue to benefit from nearshoring.
Italy
Italy offers high volumes of obsolete stock suitable for repositioning. Milan leads the data center and logistics surge, while Rome presents hospitality and residential redevelopment opportunities.
Greece
Greece has re-emerged as an investment hotspot due to affordability, growing tourism, and port-driven logistics. Athens continues to benefit from urban regeneration programs targeting mixed-use and residential redevelopment.
Sector Examples Illustrating Value-Add Execution
Hospitality: Converting a Coastal Resort into an ESG-Optimized Destination
A coastal resort in Southern Spain acquired at a distressed valuation undergoes full refurbishment, energy system modernization, and brand repositioning. ADR increases by 18%, enabling a significant uplift in asset value.
Logistics: Reconfiguring Industrial Units for Last-Mile Operators
A 1980s industrial warehouse in Milan is converted into a last-mile distribution hub. Redevelopment increases rents by 22%, driven by demand from parcel delivery companies.
Residential: Aggregating Multifamily Blocks in Lisbon
Several fragmented buildings are consolidated into a modern multifamily rental platform. Rent growth and improved occupancy create predictable cash flow.
Data Centers: Converting Industrial Plots into Edge Data Hubs
An obsolete warehouse near Madrid’s M-40 ring road is converted into an edge data center with long-term colocation tenants, generating higher yield-on-cost than traditional logistics use.
Positioning the Fund for Sustainable Growth
The strategy focuses on long-term megatrends: tourism recovery, digital infrastructure expansion, logistics demand, and structural housing shortages. Southern Europe’s combination of affordability, rental growth, and demographic resilience provides a durable foundation for value creation.
Luxembourg’s SICAV-RAIF regime enables efficient deployment and scaling of diversified real asset strategies, giving investors access to a broad pipeline with professional oversight and alignment. Damalion supports international project sponsors to setup their Luxembourg investment fund. Please contact your Damalion experts now.
Southern Europe Opportunities SICAV-RAIF: Key FAQs
What is the core focus of Southern Europe Opportunities SICAV-RAIF?
The fund focuses on value-add investments across hospitality, logistics, residential, data centers, and urban repositioning in Southern Europe.
Which types of investors is the fund designed for?
It is aimed at institutional investors and family offices seeking exposure to discounted real assets with strong rental and capital growth potential.
What is the target annual net return of the fund?
The fund targets a 15% annual net return after fees, based on value-add acquisition and repositioning strategies.
Why is Southern Europe attractive for value-add private equity?
Southern Europe combines demographic resilience, strong tourism, growing logistics demand, and entry prices below the European average.
Which countries are the main targets for the strategy?
Spain, Portugal, Italy, and Greece are the core markets, each offering distinct opportunities across key real asset sectors.
How does the fund invest in tourism and hospitality?
The fund targets hotels and leisure assets with repositioning potential, including refurbishments, ESG upgrades, and brand optimization.
What role do logistics assets play in the portfolio?
Logistics assets support e-commerce and nearshoring trends through warehouse redevelopments, cross-docking, and last-mile hubs.
Does the strategy include residential and affordable housing?
Yes. Residential conversions, multifamily aggregation, and energy-efficient new developments are part of the value-add strategy.
How is digital infrastructure integrated into the fund?
The fund invests in data centers, edge facilities, and industrial conversions positioned near power and fiber infrastructure.
How do recent market disruptions create investment opportunities?
Covid, the Ukraine conflict, and interest rate shifts created pricing dislocations and refinancing pressure, enabling discounted acquisitions.
What is the typical holding period for value-add assets?
Holding periods generally range from four to seven years depending on redevelopment scope and stabilization needs.
What yield uplift is expected from logistics redevelopments?
Logistics repositioning typically produces yield-on-cost uplifts of 10% to 18% once stabilized.
How much uplift is targeted in hospitality repositioning?
Hospitality projects often achieve ADR increases of 15% to 25% alongside operational margin improvements.
Does the fund integrate ESG and energy-efficiency initiatives?
Yes. ESG integration includes energy upgrades, building system modernization, and adaptive reuse to reduce carbon intensity.
How does the RAIF structure support institutional investors?
The RAIF regime offers flexibility with AIFM oversight, aligning reporting, governance, and risk controls with institutional requirements.
What risk mitigation measures support the strategy?
Diversification across sectors and geographies, conservative leverage, and disciplined underwriting help reduce risk.
How does the fund manage hospitality seasonality?
Seasonality is balanced through exposure to year-round urban markets and diversified stay formats including leisure, business, and extended stays.
Are investors exposed to development risk?
The fund selectively undertakes development or heavy refurbishment when value-add visibility is clear and supported by market demand.
Why are entry prices lower in Southern Europe?
Prices are often 20% to 40% lower due to legacy inefficiencies, historical risk perception, and lower institutional competition than in Northern Europe.
