Exeter Property Group is nearing the initial close of its first European commingled real estate fund, Exeter Europe Value Venture III, PERE has learned.
The Conshohocken, Pennsylvania-based industrial real estate investment manager is expected to raise €200 million-€300 million with the first close, which is slated to occur next week, according to sources familiar with the matter. Exeter Europe Value Venture III will be focused on buying and developing large warehouses and multitenant light industrial warehouses in major distribution markets in the UK and continental Europe.
Limited partners in Europe Value Venture III are understood to include Singapore sovereign wealth fund GIC Private, which is committing €75 million to the fund, and the New Mexico State Investment Council, which earmarked $75 million to the vehicle in September.
With Europe Value Venture III, Exeter is targeting €500 million-€700 million in equity; a net leveraged internal rate of return of 12-14 percent; a net equity multiple of 1.7x; a gross leveraged IRR of 16-20 percent; and a gross equity multiple of 2x, according to documents from NMSIC.
The fund currently has a pipeline of more than 40 transactions totaling €820 million, with 71 percent in primary distribution markets and 29 percent in select secondary markets. Geographically, Europe Value Venture III is expected to be allocated fairly evenly among markets, with 20-25 percent each to the UK and Germany; 20-25 percent to Spain, Italy, Poland and the Czech Republic; 15-20 percent to France and Benelux; and 5-15 percent to other markets in the region, the NMSIC documents said.
Exeter is targeting 60 percent of the Europe Value Venture III’s capital to go to renewing and reletting space in well-leased properties; 25 percent to redevelopment and development; and 15 percent to leasing up vacant space. The fund’s capital would be 70 percent invested in big box warehouses and 30 percent in last-mile logistics and light industrial assets.
GIC was one of the early backers of Exeter’s European real estate strategy, forming a €300 million partnership, known as Europe Value Venture II, with the firm in March 2015. Exeter also formed a €41 million separate account, known as Europe Value Venture I, with Morgan Stanley Alternative Investment Partners in 2014.
Europe Value Venture I generated a net leveraged IRR of 19-20 percent; net equity multiple of 1.8x; gross leveraged IRR of 23.4 percent; and gross equity multiple of 2x as of September, according to the NMSIC documents. Meanwhile, Europe Value Venture II produced a net IRR of 16-17 percent; net equity multiple of 1.6x; gross IRR of 22 percent; and gross equity multiple of 1.8x.
Exeter declined to comment.