Benson Elliot Capital Management has closed its second pan Europe fund, Benson Elliot Real Estate Partners III with €510 million of commitments.
The London firm says it began fundraising in the third quarter of 2008 with a target of €500 million. In a statement, the firm said it closed on almost 90 percent of its target capital in ten weeks.
The vehicle will invest in a broad range of performing and non-performing real estate assets.
Benson Elliot decided to cap ‘BEREP III’ at a size 50 percent larger than the company’s previous fund, notwithstanding strong investor demand. The increased fund size for BEREP III reflects the company’s “expectation of substantial market opportunities” during the investment period.
Subscribers to the fund comprise institutional investors from Europe, North America and Asia, including corporate and public pension funds, endowments, foundations and family offices. All but one of Benson Elliot’s BEREP II investors have subscribed to BEREP III. Among the lead investors are Makena Capital Management, The State Teachers Retirement System of Ohio and UTIMCO.
To date, BEREP II has invested around €150 million in six European countries, with approximately 70 percent of the capital invested in France and Germany. With the closing of its second fund, the firm has access to more than €600 million of discretionary equity, it said, and up to €2 billion of buying power.
“Benson Elliot expects the ongoing disruptions in the global financial markets to create a steady flow of distressed investment opportunities, as many investors seek to reduce their exposure to the property sector, waves of property debt reach maturity, and new debt remains scarce,” said the firm. “In particular, investors who made investments late in the property bull market, often using excessive leverage, will come under increasing pressure to liquidate their positions.”
Marc Mogull, managing partner, said: “During the second half of 2008 virtually no private equity real estate funds were launched, due to the paralysis in the real estate sector and wider financial markets. After several years in which investors have had to forage in increasingly remote markets in search of higher returns, or take on risks in established markets that, in hindsight, may seem imprudent. The next few years will offer a once in a generation opportunity for savvy investors to buy great assets, in major markets like the UK and Germany, on sensible terms.”
He added: “There will be plenty of challenges and plenty of false dawns. Patience will be a virtue in this downturn, because there will be no shortage of opportunities and recovery won’t come quickly. Our approach is not vulture investing, it’s value investing. The key task is not to time the precise market bottom, but to make the right investments, at sensible prices, and to deploy the right strategies to see those investments through to the inevitable market recovery.”
Probitas Partners advised the firm on the fundraising.