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Barings closes on $506m for new RE fund – Exclusive

The Charlotte, North Carolina-based real estate investment manager is about halfway toward the hitting the target for its debut European core vehicle.

Barings Real Estate Advisers has raised $506.1 million for its debut European core real estate fund, Barings European Core Property Fund, according to a filing with the Securities and Exchange Commission.

Of that amount, $330.27 million was raised from US and non-US third-party investors, the filing said. In February 2016, PERE reported that Barings was seeking to raise at least €1 billion for the open-ended fund. The firm held a first close in May on a seed investment of €175 million from its parent company, Massachusetts Mutual Life Company.

Among the fund’s limited partners are the Illinois Municipal Retirement Fund, which committed €25 million, or approximately $28.3 million, in August to what was then known as Cornerstone European Core Fund.

Through the fund, Barings will focus on the retail, office and logistics sectors in the UK, France, Germany, Nordics, Spain, Italy and the Netherlands, according to a fund document. Target assets will range from €30 million to €70 million in size. The fund will have maximum leverage of 30 percent loan to value at the portfolio level.

The seed portfolio for the fund included two office buildings in London and Hamburg, Germany, respectively; a retail asset in Malmo, Sweden; and a logistics property in Lille, France. The properties – acquired between November 2015 and April 2016 for an aggregate €198.5 million – are forecasted to generate a total internal rate of return of 7.4 percent, the document said.

Prior to launching its first European core property fund, Barings formed five core, core-plus or core-plus/value-added European real estate separate accounts between 2008 and 2015. The most recent accounts with available performance data were a €367 million UK office mandate and €75 million German diversified mandate, both created in 2013. The two accounts were generating total since-inception returns of 19.4 percent and 6.82 percent, respectively, as of September 2015, according to the fund document.

Barings Real Estate Advisers, then known as Cornerstone Real Estate Advisors, began building its European operations with the acquisitions of London-based Protego Real Estate Investors in 2010 and German real estate manager Pamera in 2014. It furthered its European expansion in 2015 with the hiring of senior executives and opening of offices in Italy, France and Spain. In September, Cornerstone, along with other MassMutual subsidiaries, officially rebranded under the Barings name.

In 2016, Barings Real Estate Advisers closed on over $1.1 billion of transactions in Europe, bringing its assets under management in the region to $4.2 billion. It also continued to make key hires in Europe, including appointing Aberdeen Asset Management’s Göran Bengtsson head of the Nordics in October.