DRC Capital has reached a final close of its European Real Estate Debt (ERED) Fund II, with total commitments in excess of £487 million (€596 million; $817 million). The London-based firm said it managed to surpass its target of £400 million for the second European debt fund it has raised.
In a statement, DRC said equity commitments came from institutional investors across Europe and North America. In particular, it attracted a number of significant commitments from new investors, with “strong interest” from pension plans, the firm noted. Evercore acted as exclusive global placement agent for the fundraise.
Larger than its 2011 predecessor that raised £300 million, ERED II is continuing the same strategy of acquiring existing debt and originating new debt secured by European commercial property. DRC is lending against all commercial real estate property types and recently has executed loans in the office, hotel and retail sectors in Western and Northern Europe.
Explaining the thesis, DRC said the strategy exploited “the significant funding gap” that has emerged as a result of the retrenchment of European banks. It added that, in 2008, the firm “pioneered” the emergence of investment vehicles dedicated to real estate debt investing in Europe and has since become “one of the most active mezzanine debt providers” in European commercial real estate.
So far, on behalf of Fund II, the firm has transacted six portfolio investments focussed predominantly on the UK and Germany. ERED I ended up making 16 investments in total, of which five have been fully realized to date.
Dale Lattanzio, managing partner, said: “It is an exciting time in the evolution of the commercial real estate debt investment sector in Europe, and we are focused on capturing the investment opportunity on behalf our investors.”