Ex-Merrill Lynch fund almost fully invested as Peakside agrees to German deal

Peakside Capital’s €261m European real estate opportunity fund, inherited as part of its spin out from Bank of America Merrill Lynch Global Principal Investments, is closer to being fully invested following the acquisition of the German headquarters building of chemical group Solvay.

Peakside Capital, the European private equity real estate firm spun out of Bank of America Merrill Lynch Global Principal Investments, is edging closer to being fully invested on one of the legacy funds it inherited after leaving the investment bank.

The firm announced today it had agreed to acquire the German headquarters office of international chemical group, Solvay, in a sale and leaseback deal believed to be valued at approximately €20 million. The Hanover-based office comprises 244,000 square feet of space – all of which is let to Solvay.

Boris Schran, founding partner of Peakside, said the deal reflected the “attractive investment opportunities currently on offer in Germany. Particular to the asset, he said: “This is a well maintained, high quality and well located asset. In particular, we were attracted by the strong covenant of Solvay and the long lease term, providing surety of income and a stable medium to long term investment.”

While the value of the acquisition of the Hanover office was small, Peakside is now more than 75 percent invested on its Peakside Real Estate Fund I, a Europe-focused opportunity real estate fund previously known as the Merrill Lynch Real Estate Opportunity Fund.

The fund, which attracted €261 million of equity, was raised prior to Bank of America’s takeover of Merrill Lynch in 2009. After the takeover, the Global Principal Investments unit of the conjoined bank division reduced its exposure to real estate leading to the management buyout of its European business and, subsequently, the genesis of Peakside Capital.

Aside from inheriting the Merrill Lynch Real Estate Opportunity Fund, Peakside also inherited the Bosphorus Real Estate Fund I, another opportunity fund which is focused on Turkey and which attracted €204 million of commitments.

Peakside would not comment on its capital raising plans but, typically, when limited partnership real estate funds pass a certain prerequisite hurdle in terms of equity deployed, their managers usually are able to then launch follow-on funds in an effort to attract more capital to invest. Typically, that hurdle is between 75 percent and 85 percent of the fund’s equity.