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EXCLUSIVE: Mercer holds £85m first close on debut fund

The London-based real estate investment manager is targeting around £225 million for its first commingled fund.

Mercer Real Estate Partners, the London-based real estate investment manager, has held an £85 million (€119 million; $133 million) first close on its first UK-focused value-add/opportunistic fund, PERE has learnt.

The firm, established in 2010 by Michael Kovacs and Brandon Hollihan, who previously worked at New York-based real estate investment manager Westbrook Partners, held the closing for its Mercer Real Estate Partners II fund after significant early interest and is targeting around £225 million in total commitments overall.

US investor, The University of Texas Investment Management Company (UTIMCO), is understood to be a cornerstone investor in Mercer’s fund.

Mercer, which began by working on a deal-by-deal basis with investors and invested its first discretionary separate account fund on behalf of a Swiss family office client, tends to strike small to mid-sized transactions, typically in the £10 million to £30 million range.

The firm targets the office, residential, retail, industrial and hospitality sectors in the UK primarily.

Examples of recent deals include the October 2013 purchase of Mitre House on Aldersgate Street in London, a refurbishment project where it successfully obtained planning for approximately 200,000 square foot of Grade A office space and secured DLA Piper as a tenant.

In an earlier deal, Mercer sold 80 Hammersmith Road to Cording Real Estate Group for £20.5 million where, thanks to a major refurbishment, the firm was able to lease the 40,775-square-foot office to five tenants at a combined annual rent of £1.285 million.

Mercer declined to comment.