Fleming fund makes 2.1x money on Russia real estate

The first-ever institutional fund raised to invest in the Russian property market has returned 2.1x money to its investors.

Garber Hannam & Partners (GHP), the spinout from Fleming Family & Partners (FF&P)’s Russian business, has revealed that the Fleming Family & Partners Russia Real Estate fund that launched in 2003 has now returned $213 million to limited partners, which include private equity companies, sovereign wealth funds and clients of FF&P’s asset management division.
 
In a statement, GHP trumpeted: “This makes it one of the few funds to have returned significant profits to shareholders, while others have struggled to return half their invested cash.” It also marks the successful completion of the fund’s investment cycle, the firm added.

While under the control of FF&P, the Russia fund bought various commercial real estate assets in Moscow, including the Gogolevsky 11 and Lesnaya 3 office centres, and warehouse assets at Sholokhovo and Tomilino. These were sold to international and domestic buyers including Hines Global REIT and Raven Russia.

Oleg Myshkin, managing partner at GHP Real Estate, noted that the Russia fund was one of very few vehicles in the Russian property market to have completed the full investment cycle and returned significant profits to its shareholders.

Richard Hill, co-head of FF&P’s advisory business – which was not part of last year’s management buyout of the Russia business by GHP, said: “We are delighted with the outcome for our clients against the backdrop of an extremely difficult global market over the last few years and the challenges presented by operating in a complex real estate market.”

FF&P is a London-based multi-family office set up to manage the wealth of the Scottish Fleming family, which sold Robert Fleming & Co merchant bank to Chase Manhattan for $7.7 billion in 2000. The company subsequently branched out to manage money for third parties. It has an asset management division, a corporate advisory group that set up the Russian fund and a private equity business and, in total, it manages £4 billion of assets.

For its part, GHP is a financial group focusing on wealth management, real estate investment, direct investments, M&A and financial advisory work. It was set up by Mark Garber and Ian Hannam.