JER's eclectic approach

The private equity real estate firm has raised $800m for its latest European fund, targeting all asset classes across the region.

Private equity real estate firm JER Partners has closed its third European fund on €809 million ($1 billion). With leverage, JER Europe Fund III is expected to have total buying power of up to €4 billion, making it one of the largest funds in the region. The new vehicle easily surpasses the size of JER's second European fund, which closed in January 2004 on €123 million.

The firm has so far committed to 13 transactions totaling approximately €786 million in enterprise value, including the Great Eastern Hotel at London's Liverpool Street train station and a residential site in Greenwich. Two of the firm's recent deals were announced in December: the acquisition of five retail showrooms in Italy for €39 million and the purchase of a 50 percent stake in the Manotel hotel chain in Switzerland. Other investments have taken place in Germany, France, Belgium and Turkey.

Malcolm Le May, who leads a team of 28 professionals in Europe, said the firm has “an eclectic approach” to the region, where the business model involves partnering with local operators, most of which are exclusive to JER.

A large portion of investors in JER's latest fund are from the US, with smaller commitments being made by Europeans. Le May noted that European institutions have gravitated towards core property strategies in the past, though tendencies are shifting. “Now there is a lot more interest in having a family of products,” he said. “They are looking for geographic and thematic diversification,” pointing to Dutch institutions as being among the most active.

Though the fund is pan-European, it does not plan to overlap with another fund that JER recently closed. Last month, the firm, in conjunction with Moscow-based private equity and real estate firm Alfa Capital Partners, raised $321 million (€231 million) to invest in Russia and the Ukraine. Though no details have been released, the fund has completed transactions in Moscow and St. Petersburg and has several more deals in exclusive negotiations, according to the firms.

Though JER has yet to invest in Asia, it has been actively looking outside of its traditional markets in the US and Europe for expansion opportunities. Brazil is said to be high on the agenda, and the firm is rumored to be in the middle of raising a fund targeting the country.

Cordea launches second Italian property fund
Cordea Savills, the London-based property fund manager, is launching Italian Opportunities II, a €300-million ($390 million) vehicle focused on the Italian real estate market. The fund is a follow-on from the firm's first Italian opportunistic vehicle, which was launched in July 2006 and has acquired assets with a gross value in excess of €1 billion. The current vehicle is targeting net annual returns of 20 percent and is concentrating on the same strategy of acquiring single assets and portfolios via its Milan office. A key difference is that this time around the firm is considering the public markets as a way to exit some investments.

ING closes first value-added European fund
ING Real Estate Investment Management, the Dutch institutional real estate manager, has closed its first value-added fund in continental Europe with €300 million ($390 million) in commitments. The ING Real Estate Iberian Value Added Fund, focused on the Spanish and Portuguese markets, had an initial target of €250 million. ING's move into value-added funds reflects the growing demand from investors to diversify from core and core-plus strategies into riskier platforms. The seven-year fund is targeting a return of more than 13 percent and has a three-year investment horizon. José Antonio Martín-Borregón is managing the fund from ING's Madrid office.

Dolphin taps equities market for €500m
Dolphin Capital Investors is set to raise another €500 million ($669 million) via a share offering on London's Alternative Investment Market. The Southeast Europe-focused development firm, which was formed by private equity real estate firm Dolphin Capital Partners, expects the funds to be fully committed in the next 12 months. It comes just two months after the company raised €310 million to finance the acquisition of Cyprus's largest private developer, Aristo Developments. The offering was expected to take place on June 27. Dolphin Capital Investor was seeded with €3 million of capital from Fortress Investment Group and €2 million from “friends and family.” The firm was founded by former Soros Real Estate Partners alumni Miltos Kambourides and Pierre Charalambides.

CBRE Investors closes €1.3bn UK fund
CB Richard Ellis has closed Strategic Partners UK III having raised £440 million (€654 million; $880 million) of equity, giving it €1.3 billion of acquisition firepower including leverage. The firm said 60 percent of the committed equity is from repeat limited partners and that 30 percent of the value-added fund is already invested. CBRE Investors has already purchased three distribution warehouse developments from HelioSlough for £94 million and has also made six additional investments across the UK. The private equity real estate arm of global property services firm Richard Ellis last year launched two fund of funds products, the Richard Ellis Europe ex-Alpha Fund and the Pan-European Alpha Plus Fund, which aim to raise a combined €750 million.

HSBC's European chief returns to EuroHypo
Ahsan Ellahi, head of HSBC's European real estate business, has joined EuroHypo to become head of its newly created European Structured Finance division in London. Ellahi joined HSBC from EuroHypo in October 2004, a move which itself marked a return of sorts; Ellahi began his real estate career at HSBC. Last year, HSBC also lost its global head of real estate banking Maxwell James, along with another professional, Richard Choi, who left to set up an independent investment bank Lowndes Partners.

Morgan Stanley VP sets up Russian platform
Maksim Kunin, a former vice president at Morgan Stanley Real Estate in Europe who was involved in the firm's entry into the Russian real estate market, has left to start up his own firm. Kunin, who joined Morgan Stanley in 2005 and was involved in the special situations fund taking a minority stake in RosEuroDevelopment, has set up Investment Management Group. The firm will provide foreign and domestic investors access to Russia's real estate market via a serious of investment funds and direct or commingled accounts. Kunin joined Morgan Stanley from Fleming Family and Partners, where he was head of real estate. Prior to that, he worked at La-Salle Investment Management from 1999 to 2002.

Aberdeen hires Russia team
Aberdeen Property Investors, the Stockholm-based property division of Aberdeen Asset Management, has poached a team from Baltic Property Trust, a regional fund manager, to spearhead its drive into Russia. Ole Dall-Hansen, previously director of fundraising and investor relations at Baltic Property Trust, is heading up the team, which will be based in St. Petersburg. The group will work with existing Aberdeen investment managers, based in Finland, who have already been conducting in-depth research with a view towards raising an inaugural Russian fund.

Cable to serve on EU expert group
Neil Cable, head of Fidelity's European real estate business which recently announced that it would invest directly in European property for the first time, has been appointed as one of the members of an expert group that will assess the EU market for open-ended, retail-orientated real estate funds. The group's task will be to advise the European Commission on the risk and performance characteristics of open-ended real estate funds as part of the body's modernization of European investment funds.

Niam hires chief investment officer
Niam, the private equity firm focused on property in Northern Europe, has appointed Fredrik Jonsson to help drive the firm's investments in the region. Jonsson will become the firm's chief investment officer, effective later this summer, when he joins from contractor Skanska Commercial Development Europe, where he is a vice president. At the Stockholm-based investment company, which employs approximately 20 people, Jonsson will be responsible for property acquisitions and development projects for the firm's real estate funds.