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Investcorp makes Europe investment debut – Exclusive

The Bahrain-based alternative investment firm has purchased logistics assets in the UK as it looks to build an approximately $2.5bn exposure to real estate in the region. 

Investcorp, the Bahrain-based alternative investment firm, has completed its first real estate deals in Europe, buying logistics assets in the north of England.

The firm purchased two warehouses in Doncaster and a light manufacturing property in Hull for a combined £35 million (€39.8 million; $45.4 million). The assets comprise a total of 504,000 square feet and are let to tenants on long leases.

They were purchased as part of a core-plus risk and return strategy from which Investcorp expects to make returns of 12-14 percent IRR and a 1.4-1.5x equity multiple.

The deals come more than a year after Investcorp appointed ex-Macquarie and Citibank executive Neil Hasson to leads its real estate efforts in the region. According to Hasson, the firm came close to making its first investments shortly after he joined. However, the UK’s vote to leave the European Union last June and the uncertainty the referendum injected into financial markets delayed activity.

He told PERE: “We treaded very carefully given the uncertainties surrounding Brexit. We had one transaction tied up just prior to the Brexit vote. When it happened, we paused. But we knew the UK would be the market we would do our first deal.”

In addition to being the first investments for Investcorp in Europe, the industrial purchases were also the first of a planned £100 million portfolio the firm is aiming to aggregate alongside a local operating partner, Brydell Partners. The portfolio is part of a wider mission by the firm to grow its European exposure to property to around $2.5 billion, roughly half the size of its asset base stateside. To date, Investcorp’s focus has been entirely on the US market where it has a multifamily-heavy portfolio.

“Most of our growth in real estate will come from Europe,” Hasson said. “In the US, we’re selling at a rate that is probably just a little less than what we’re buying, so it’ll be difficult to grow there.”

The European platform, on the other hand, is expecting to invest between $250 million and $500 million a year as it aims to reach its target, he added. Further investments are expected in the UK, Germany and France, and across a spectrum of asset classes including logistics, offices and various types of residential.

Hasson currently leads a team of three professionals from an office in London, but his team is expected to grow to around 10 staff, he said.