According to a report in the Daily Telegraph newspaper, Lehman Brothers, the US investment bank, is set to boost its real estate fund products with plans for a €5.9 billion ($7.4 billion) private equity real estate fund, half of which could be invested in Asia.
Lehman Brothers is considering launching the new fund following the success of the bank's existing vehicle, which is run out of the US by Raymond Mikulich and Mark Walsh, co-heads of Lehman's global private equity real estate team. Gerald Parkes runs the firm's European operations.
So far, Lehman has managed to invest around two-thirds of its existing €2.4 billion fund, according to Mark Newman, chief investment officer for the global private equity real estate team, in an interview with PERE earlier this year. That is despite the fierce competition from investors for commercial property around the world.
Lehman Brothers would not comment on the report, saying it was “speculation.”
However, the newspaper insists that although a final decision about the new fund is unlikely to be taken until after Christmas, early stage discussions have occurred. By the time a final decision is made, the investment bank should have successfully invested three-quarters of its current fund, known as Lehman Brothers Real Estate Partners II.
Preparations for a new fund come at a time of huge fund raising by its rivals. Morgan Stanley Real Estate, for example, has recently closed its third special situations fund on $2.2 billion (€1.8 billion) and has already invested $1.2 billion of the equity commitments to date.
It is thought that Lehman's new fund would be run alongside the bank's $1.1 billion mezzanine fund.
Lehman's current private equity real estate fund invests between 15 and 20 percent of its capital in Asia, but senior real estate figures want to increase this weighting according to the Telegraph, possibly with as much as 50 percent of the new fund being dedicated to the region.
“One of the great things about working at Lehman Brothers is that we get a huge amount of support as we go out and try to break into new markets,” Newman told PERE earlier this year. “The bank is very supportive of us growing the footprint of the business.”
CapMan holds first close
CapMan, the Stockholm-headquartered private equity firm, has held a first close on its second private equity real estate fund as it continues its push into the property sector. CapMan RE II has raised €69 million ($86 million) so far from seven investors, giving it an investment capacity of approximately €275 million with leverage. In a statement, the firm noted that the vehicle's total investment capacity will reach €600 million upon final closing, implying an equity target of €150 million. The vehicle will primarily focus on property development in Finland.
Sweden above forecast
Aberdeen Property Investors expects total returns on Swedish properties to reach 11.8 percent this year, an increase relative to its original forecast of 10.1 percent. Aberdeen said yields have fallen further than expected, leasing activity has increased at modern offices in central locations and foreign investment continues to be strong.
Doughty refinances Finnish portfolio
Doughty Hanson has refinanced the four remaining properties in its Finnish retail portfolio, which will return €35 million ($44 million) to investors. Together with the proceeds from the four assets already sold, the investments have generated a cash return of 1.4 times and a gross internal rate of return of 17 percent. Doughty Hanson's first real estate fund acquired the eight Finnish retail assets in May 2004 from Ilmarinen Mutual Pension Insurance Company.
Schroder launches fund of funds
Schroder Property has launched two Luxembourg-based real estate fund of funds. The firm's European Fund I will invest in unlisted property funds across Europe while the Continental European Fund I will be aimed primarily at UK investors looking to invest outside their home country. The size of each closedend fund is being restricted to €250 million ($313 million).
Orlando closes on €205 million
Orlando Real Estate, the Munich-based private equity firm focused on special situations real estate investments in Germany and the German-speaking countries in Europe, has closed Special Situations Realty Partners. The fund, which launched in February 2006, has closed on committed capital of €205 million ($257 million).
RREEF wins Coca-Cola mandate
RREEF, the global property asset manager owned by Deutsche Bank, has been appointed to run the real estate element of the Coca-Cola Enterprises Pension Scheme. An allocation of 10 percent of the pension fund's assets will be invested through the RREEF's UK Multi-Manager Service. The majority of the portfolio will comprise a mixture of unlisted funds although it can also invest in European real estate and listed securities.
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