US alternative investment firm Harbert Management has raised $305 million (€226 million) for its second opportunity fund, Harbert European Real Estate II, the firm’s largest European vehicle to date.
Scott O’Donnell, managing director of the European Real Estate Investment team, said that the fund would target all asset classes across Europe. “We will seek out investments that are below the radar screen of the larger funds, but too big for the more local, regional investors,” he said.
Harbert’s first fund, which totaled approximately$54 million in equity, came primarily from internal Harbert capital. The vehicle, Harbert European Real Estate I, made approximately 13 investments with a total transaction value of around $300 million. Thus far, the fund has sold six assets, generating a 40 percent return and a multiple of two times equity on its realized investments.
Harbert formalized its drive into the European market in 2002 and, according to O’Donnell, wanted to test its strategy with a small fund before expanding its efforts. “We want to make sure we have put the right team in place, work together well, can invest money and can prove that the strategy works,” he said. “Once that is done, we go out and market the fund.”
With leverage of up to 75 percent, Fund II has the capacity to make $1.2 billion in acquisitions, which it typically makes through joint ventures or with country-specific partners. Thus far, the firm has invested $50 million of equity out of the fund in deals in Spain and Germany. But Harbert is also looking further east.
“We are seeing deal flow in Bucharest as well as Croatia and similar markets,” said O’Donnell, who added, however, that Russia is not yet on the list.
Harbert, which is based in Birmingham, Alabama and has approximately $7.5 billion in capital under management, has been expanding its real estate operations recently accross Europe. In February, it opened an office in Madrid and hired dealmaker Roque Rotaeche from Richard Ellis. More recently, the firm hired US Invest’s Adam Karasch to cover Poland. The firm has also opened an office in Warsaw and Karasch’s role will eventually expand to include neighboring markets in Central and Eastern Europe.
CBRE launches hedge fund
Richard Ellis and derivative specialist fund manager Reech AiM have launched a private, pan-European property investment vehicle, Iceberg Alternative Real Estate, which is targeting €547 million ($735 million) of investments. The hedge fund vehicle offers an alternative to the traditional strategies of investing in real estate securities. Hedge funds are increasingly moving into property, as big names like Sir Ronald Cohen, the co-founder of Apax Partners, and George Kountouris, the former head of Deutsche Bank’s private equity real estate group, both prepare to launch funds.
Teesland launches €370m Germany fund
Teesland iOG is set to raise €370 million ($500 million) for its latest real estate vehicle, the German Aktiv Property Fund. The company, which is led by the chairman of Sheffield United Football Club Kevin McCabe, hopes to invest €2 billion ($2.7 billion) in the German property market, including leverage. David Seddon, the firm’s chief investment officer for Europe, said in a statement: “The German Aktiv Property Fund is very well positioned to benefit from the resurgence of the German economy.” He also said that other Aktiv branded funds would follow in the near future. The launch of the German vehicle follows that of the Nordic Aktiv fund, which raised over €300 million.
Greek bank targets real estate
Greek investment group Marfin has revealed plans to raise over €5 billion ($6.7 billion) via a rights issue for private equity investments in Southeastern Europe, including investments in real estate. MIG, the little-known investment arm of Marfin, said it wanted to invest in Greece, Turkey, Hungary and surrounding countries as far north as Russia, focusing primarily on the healthcare, leisure, utilities and real estate sectors, as well as privatizations and infrastructure projects.
Fleming markets global fund of funds
FF&P, the private asset management vehicle of the Fleming family and Standard Chartered Bank, is marketing a £500 million (€733 million; $987 million) global fund of funds vehicle seeded with £25 million of the firm’s own capital. The open-ended fund, which is managed by FF&P’s head of real estate, John Dwyer, will invest in a variety of strategies, including illiquid real estate funds, open-ended growth vehicles and income-focused liquid investments. The fund has made commitments to Citigroup’s Asia-Pacific opportunity fund, as well as Macquarie’s core-plus vehicle in Japan, two funds managed by JER Partners and Patron Capital III.