Barwood Capital, a UK-focused firm, has raised £50 million (€62 million; $80 million) for a commercial property vehicle with backing from a US bank, thought to be JPMorgan.
Barwood, which was established in 1996 and is based in Northampton in the east Midlands area of England, said it had raised the Barwood Commercial Property Fund with £100 million of firepower, including debt. Though the identity of the investment bank was not revealed, it is understood to be JPMorgan, with whom Barwood jointly bought the 72-acre Wellesbourne Distribution Park in Warwickshire for around £21 million last year.
The new vehicle is targeting “historically low land values and strong investment and development opportunities,” Barwood noted. The overall strategy is to either buy land with the potential to increase its value through planning consents, develop pre-let offices and industrial property or re-gear leases on existing property and/or let vacant space. The five-year fund, which is targeting returns of 15 percent, seeking to invest in smaller deals of between £5 million and £100 million.
Richard Bowen, managing director, said in a statement: “Current market conditions and the continued absence of easily available finance mean that there has rarely been a better time to invest in property opportunities.”
Revealing more details of its latest effort, Barwood said it would be paid only on performance and not on asset management or net asset value of the fund. The directors of the company have co-invested in the fund, and their performance fees and a share of profits will only be earned once investors receive a 6 percent return, the firm noted.
Barwood was created as a result of a management buyout from housing company, Wilson Connolly. In 2001, it raised its first property fund, which returned an average of 20 percent IRRs to investors. Its second fund was raised in 2009 and is now fully invested. That offering has returned an average of 6 percent per year so far, but it is on track for an overall IRR of 13 percent over its six year life span.