Genesta, the Nordics-focused real estate investment management firm, is capital raising for its second private equity real estate fund and is aiming to attract €250 million of capital commitments from investors, including for the first time, from the US.
PERE understands the Stockholm-based firm has appointed RiverBridge Capital Partners and CrossCon Real Assets Capital, the private capital advisory groups, to help it raise the capital and that a first closing is anticipated in the second quarter. The firm and its advisors are thought to be targeting a base of about 65 US institutional investors in addition to European investors to that end.
The fund has a similar value added investment strategy to its debut vehicle, Genesta Nordic Baltic Real Estate, which was closed on €176 million in 2007 with equity from UK and Dutch pension funds and funds of funds. This time around, however, investments in the Baltic countries are unlikely to figure.
That fund is currently producing an IRR of between 8 percent and 9 percent and an equity multiple of about 1.25x percent from 10 investments made in the office, retail and logistics sectors. While that is lower than its target of mid teens IRRs and a 1.5x equity multiple, it would still be considered a solid performance given the capital was raised and deployed immediately before the global financial crisis took hold. Further, the fund runs until 2015 by when it is understood to expect to have increased the equity multiple.
For the second fund, Genesta Nordic Real Estate II, the firm is maintaining a similar return target.
While a smaller component of Europe’s institutional real estate investment universe, the region has been successful recently in attracting capital from some of the world’s largest investors. Last year, Niam raised €719 million for its fifth opportunity fund, Andersson Real Estate Investment Management raised €240 million for its second value added effort and Nordic Real Estate Partners brought in €121 million for its second retail-only value added vehicle.
Investors are typically attracted to the region as, relative to other markets in Europe, it boasts political stability, sound GDP growth expectations and low vacancy rates as well as attractive spreads between prime and secondary yields.
Genesta was established in 2003 as a local operating partner for large European funds managed by firms including LaSalle Investment Management, JPMorgan, Merrill Lynch and American International Group. Transacting initially on a deal by deal basis, the firm built up a sufficient track record to enter the fundraising arena in 2007. Currently it manages €780 million of real estate although it has transacted €1.3 billion of properties since its establishment, according to marketing materials seen by PERE.
All parties declined to comment.