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Mercer holds final close for second RE fund on £235m

The London-based real estate investment manager has accrued more than its original target of £225m ($309m; €278m) and has also received investment from a far wider crop of investors than for its previous fund.   

Mercer Real Estate Partners, the London-based real estate investment manager, has held a final close on its second property fund on £235 million ($309million; €278million). 

Mercer Real Estate Partners II will focus on value add and opportunistic assets in the UK. The investment firm has raised approximately £10 million more than its original target size of £225 million. 

The capital is made up of discretionary commitments, the firm said, from a diverse group of institutional investors in North America, the UK and Europe which marks a departure from the narrow capital base in Fund I. 

The fund was initially cornerstoned by University of Texas Investment Management Company (UTIMCO) in the first close and went on to raise commitments from additional US endowments, UK public pension funds, corporate pension funds and global investment management groups. 

Mercer said Fund II would continue the firm’s strategy of investing in emerging locations and niche sectors. Fund II, which is closed-ended and co-mingled, is focused on small and medium-sized transactions, ranging from £10 million to £30 million. Recent deals from the vehicle include the acquisition of an eight-story office building in Manchester city centre and the purchase of a 68,000 square foot London office property, Harbour Island (pictured) in Canary Wharf.

Mercer held a first close for Fund II in May 2015 on £85 million, and by January this year, the total capital raise had increased to £200 million. 

The firm, established by Brandon Hollihan and Michael Kovacs, who previously worked at New York-based investment manager Westbrook Partners, began by working on a deal-by-deal basis with investors in 2010. It invested its first discretionary separate account in 2012. 

“We are extremely pleased that we have had such a positive response from a thoughtful investors base, both here and in the US,” said co-founder Hollihan. “Recent political events may have brought forward a correction that was already developing in certain UK subsectors and there should be significant opportunities during this investment cycle to strategically invest at attractive values.” 

Atlantic-Pacific Capital served as the placement agent on behalf of Mercer during the capital raise. 

Alex Hurst, principal at Atlantic-Pacific, said, “The founders have built an exceptional track record that exhibits a differentiated approach to pricing and controlling risk along with that rare facet of true vertical integration. It has been rewarding working as both an advisor and an agent to build the capital base for this outstanding group”