Harbert Management, the US alternative investment manager, is preparing for the imminent launch of its next pan-Europe real estate opportunity fund with a target size larger than that of its present investment vehicle.
It is less than two years since the final close of Harbert European Real Estate Fund III on €405 million ($522 million) of commitments, but the Birmingham, Alabama-headquartered group is seeking to launch Fund IV at the end of the year or more likely early in 2015, sources said, even though the investment period for Fund III does not end until October next year.
As well as putting to work €254 million of equity commitments from Fund III and €151 million through a co-investment vehicle, the firm also has been recycling capital from current investments.
Investors are being prepped to expect a minimum fundraising target for Fund IV of at least €500 million, which would be a step up from that of Fund III, which held a final close in January 2013. They have also been updated on Fund III performance projections that currently show an internal rate of return in the high 30 percent range.
Though Harbert’s funds are described as pan-European, Fund III has been concentrating on a narrow spread of countries. The firm made investments almost exclusively in the UK until 2013, after which it branched out to France and Spain.
Harbert, which is run by chairman and chief executive officer Raymond Harbert, first entered the European real estate market in 1998, when it managed an affiliate’s real estate privatization in Sweden. It is run in Europe by Scott O’Donnell, senior managing director, and has offices in London, Paris and Madrid.
Harbert closed its latest US fund, Harbert US Real Estate Fund V, in June on $400 million, surpassing its $300 million target. The firm typically does not use placement agents.