Just over two months into 2018, Ardian’s debut real estate fund has corralled one of the largest pools of capital for a Europe-focused vehicle this year.
The French firm, which formed a real estate business in September 2015, launched its first real estate fund in spring 2016 with a €600 million target. Ardian Real Estate European Fund has now raised over €700 million, with commitments from about 50 investors from 11 countries and a final close is expected soon, the platform’s head, Bertrand Julien-Laferrière, told PERE.
This year, just one Europe-focused fund has closed on more capital than Ardian’s vehicle, according to PERE data. Meyer Bergman European Retail Partners III, also a value-added fund, closed on €816 million in mid-January. The three other European funds that closed this year were Europa Fund V at €716 million; ActivumSG Fund V, at €489 million; and Laxfield, at £500 million ($689 million; €559 million).
AEW Europe City Retail Fund is the largest closed-end fund in market that has raised capital, according to PERE data. The firm is just over halfway to its €800 million target.
Real estate completed the fifth pillar of Ardian’s platforms, alongside fund of funds, direct investment, infrastructure and private debt. For the real estate fundraise, Julien-Laferrière’s team relied on the firm’s long-term relationships, including two major French investors that committed more than €70 million each in the fund’s first close in May 2016. Meanwhile, new relationships included a variety of family offices, among other groups.
The fund’s investor base comprises insurance companies, some of which are longtime Ardian investors, and pension funds. Family offices and high-net-worth individuals, including from the US, Middle East and Latin America, comprised about 20 percent of the investors, an interest level that Julien-Laferrière said surprised the team.
The fund’s strategy concentrates on office investing in cities in Germany, France and Italy, splitting investments between core-plus and value-added return profiles. Overall, Ardian is targeting a low double digit net internal rate of return for the vehicle.
“It was a well-defined and focused product for investors,” Julien-Laferrière said. “There are a lot of global funds, but because we’re getting started, we wanted to be more focused so the investor has the feeling that they know exactly what we’re going to do with the money.
“A lot of investors are anxious about the dry powder in this industry. A lot of money has been raised but a lot of managers have difficulty deploying the money. However, we’ve been quite successful, with two-thirds of the fund’s capital deployed in the year after the first close.”
Ardian has made four purchases out of the fund, using about half the vehicle’s capital. The firm expects to deploy about two-thirds of the fund by the start of the summer.
The first purchase was the November 2016 acquisition of a Munich office park complex. Since then, the firm bought six office buildings across three Italian cities; the Europa building in Paris, through a joint venture with LaSalle Investment Management; and another Munich office complex.
Across its platforms, Ardian manages about $66 billion, according to Thursday’s statement.