AREA Property Partners, the New York-based real estate investment manager, has hired The Blackstone Group placement agent subsidiary, Park Hill Real Estate Group, to help it raise two funds totaling a combined $1.7 billion of equity commitments.
PERE has learned that following a beauty parade of placement agents held earlier this year it has picked Park Hill above rivals including Atlantic-Pacific Capital to help the firm raise $750 million for its AREA US Value Enhancement Fund VIII and another €750 million for its AREA European Real Estate Fund IV.
It is understood that Park Hill is being asked to help AREA to locate new investors for the funds to supplement its own efforts to raise the equity from its existing investor base.
PERE first revealed that AREA was on the fundraising trail for its AREA US Value Enhancement VIII fund in December last year. It plans to amass $2.5 billion of firepower, including debt capital, in order to buy or recapitalise commercial properties across the US, with an emphasis on apartment complexes, full-service hotels, grocery-anchored shopping centres and office properties in central business districts. The fund can also buy distressed debt.
In addition, AREA is focussed on seeking properties in Atlanta, Miami, Orlando, Dallas, Houston, Seattle, Northern California, Southern California, Washington DC, New York and Boston with Fund VIII. From its investments it expects to achieve net IRRs of 12 percent to 15 percent.
The decision to bring Park Hill on board seems to suggest a change of strategy as it was reported last December that AREA had chosen not to appoint a placement agent for the US vehicle – despite having used agents in the past. Fundraising for its new European fund began around March of this year, after which Park Hill was appointed to take on both the Europe and US mandates.
In Europe it is pursuing a value added strategy similar to its last European fund, AREA European Real Estate Fund III, which raised a total of nearly $1.4 billion in 2008. The firm is predominantly targeting the UK, Germany and France and parts of Central and Eastern Europe selectively. It is also similar in that it aims to take advantage of Europe’s ongoing deleveraging that is creating opportunities due to distressed ownership, recapitalisations and underfunded assets.
Its European fundraise comes at a time when more than a dozen firms are out raising their next generation funds in the region. Next month, London-based Patron Capital is expected to announce the final close of Patron Capital IV, which launched last year in the hopes of matching €895 million it corralled for predecessor fund, Patron III in 2007.
AREA’s senior team is comprised of senior partner Lee Neibart, Richard Mack and William Mack, who is chairman, while other principals include William Benjamin, Europe and Asia chief executive and global chief operating officer; and Stuart Koenig, global chief financial officer.