Peakside Capital, the spin-out from Bank of America Merrill Lynch, has reached a €140 million final close on its second value-add/opportunistic vehicle – Peakside Real Estate Fund II.
The final close provides the fund with total firepower of up to €400 million to invest in value-add and opportunistic transactions mainly in Germany.
Peakside has already exited its first two investments from the fund, with the sale of Square 41 in Mainzer Landstrasse in Frankfurt and Post-Palais in Arnulfstrasse in Munich. Peakside also has acquired a mixed-use asset in the Prenzlauerberg district of Berlin for Fund II. Providing office, retail and leisure space to a variety of occupiers, the Berlin property is currently 93 percent let.
“As demand continues to grow in this increasingly popular part of Berlin, opportunities to secure core and value-add assets are becoming more difficult to find,” said Boris Schran, managing partner and head of acquisitions and origination of Peakside.
Peakside’s first fund, Peakside Real Estate Fund I, was a €261 million pan-European opportunistic fund, focused on active asset management opportunities across Europe. However, with Fund II Peakside initially targeted €200 million to €300 million for a German and Central and Eastern European (CEE)-focused strategy.
But, after discussions with investors Peakside decided to hone in the strategy of Fund II and offer a German-focused fund.
“It wasn’t really appreciated to have a vehicle investing in Germany and CEE as a combined fund. During the discussions we had with investors, we ultimately said that it’s probably better to split this up and cater to the investment demand,” Stefan Aumann, managing partner and head of asset management of Peakside Capital.
At the same time Peakside entered into a separate account mandate with a large sovereign wealth fund for value-add and opportunistic investments in CEE, taking its overall equity commitments to well in excess of its initial €200 million target for the strategy.
The firm has also recently partnered with GRP Capital, a recently formed German property company, and established a joint venture targeting German residential properties. According to a source familiar with the two firms’ plans, the pair are expecting to put to work €200 million by the end of 2016.