Nordic Real Estate Partners (NREP) has closed out on its latest regional fund with a total of €170 million in equity commitments.
The Denmark-based firm, which at first set out to raise up to €250 million for NREP Nordic Retail Fund II, has a total investment capacity of around €340 million. It added that more than 25 percent of the potential investment volume has been committed.
The first closing for NREP’s value add fund came in August last year on €121 million, as nine limited partners committed to it. The limited partners were Northern European institutional investors, among them JØP, the Pension Fund for Danish Lawyers and Economists, PBU, the Pension Fund of Early Childhood Teachers, and Talanx Group, a German Insurance Group. In addition, NREP has co-invested, as in all prior NREP funds.
The second closing consisted primarily of first close investors who wished to increase their commitment to the fund, said NREP. One new Danish pension fund and a family office that did not wish to be identified are new investors.
NREP has so far made two acquisitions for Fund II, one in Stockholm and one in Copenhagen, and the company is in talks over the two next.
“We appreciate the strong support shown by our first close investors, making the second closing very efficient,” said Mikkel Bülow-Lehnsby, chief executive officer.
NREP is expecting to deliver annual dividends of 7 to 10 percent coupled with some capital appreciation leading to an overall fund target IRR of 12 to 13 percent. The fund leverage is capped at 50 percent.
Mikko Räsänen, a partner in NREP, said: “Food and other necessity retail sales remain stable and growing in the Nordics, while other retail segments have lately shown larger volatility. This is why the risk-reward balance in the necessity driven retail segment continues to be favourable provided that you focus on right locations in growth regions, locally hand-pick the right assets and continuously work with the tenants to improve asset turnover.“
The company has offices in Copenhagen, Stockholm and Helsinki and is fully owned by its partners.