Patrizia Multi Managers raises €182m first closing from Sparinvest faithful – Exclusive

After securing capital from repeat investors in its funds series, the Danish funds of funds manager previously known as Sparinvest Property Investors will now dig into new owner Patrizia’s investor base.

Hellerup-based Patrizia Multi Managers, formerly known as Sparinvest Property Investors, has raised €182 million for its fifth fund, PMM Global V, PERE can reveal.

Rude: secured investment continuity with first raise among faithfuls.

The target raise for the vehicle is €700 million with a hard cap of €900 million, an increase from the previous fund, PMM Global IV, that attracted €505 million. The firm is hoping to generate returns of 10-12 percent IRR from its investments.

For this first close, the capital stems from a group of Danish pension funds that have invested in the asset manager’s previous funds. Their money will be used to secure the vehicle’s first deals. With a €125 million commitment for this first €182 million raise, Hellerup-based PKA is taking up the lion’s share.

The next step in the fundraising for PMM is to approach investors in the network of its new owner, Augsburg-based real estate investment company Patrizia Immobilien. Patrizia purchased Sparinvest in October 2017 before changing its name at the beginning of this year.

Although still being an autonomous boutique manager, according to Mads Rude, managing director and group head funds of funds at PMM, there are synergies to gain from now being part of a larger corporation. “We have now started to work with Patrizia and their sales team around the world to hopefully also attract some international capital. It could also be wider than Patrizia’s nearby-home markets in Europe; there are also investors in parts of Asia – Japan, South Korea – that are ready to expand their real estate portfolio and supplement domestic investments with international exposure,” Rude said.

Apart from possible Asian investors, other equity is expected from investors in countries nearby Denmark like the other Nordics, Germany, and the Netherlands.

Compared to the 10 investors in PMM Global IV, Rude sees the investor count go no higher than 15 in the new fund.

The firm made 19 investments for the predecessor vehicle and the aim for PMM Global V is likewise 18-20 investments, which should enable it to access as many as 200 to 300 underlying assets.

“Scale efficiency is a factor, so sometimes the bigger commitment you can give, the better you can negotiate with the local operating partners that we invest with. So [we’re going for] slightly bigger commitments rather than more investments,” Rude said.

PMM’s fund series have developed from being mainly traditional funds of funds investment, where they invest into funds with other investors, to more and more bespoke programs in form of club vehicles or partnerships, yet still with potentially several underlying assets.

PMM partners will invest €800,000 in PMM Global V to align interest with investors, as it has been custom with previous vehicles. The loan to value will be 50 percent when committing to investments and will be taken in the underlying assets. The fund has a life of 12 years.

With a €125 million commitment for this first €182 million raise, Hellerup-based PKA, which has real estate assets of €3.3 billion out of total assets of DKr275 billion ($42.9 billion; €36.9 billion) is increasing its commitment from €100 million in PMM Global IV and €50 million each in the funds II and III in the series.

“We are a relatively small organization, so therefore we have a need to uncover and investigate the international real estate markets. Thus, we consider our cooperation with PMM as a sort of outsourcing of those tasks. Through them, we have an organization available that we could never build within PKA,” said Nikolaj Stampe, head of real estate at PKA.

PKA has also placed a co-investment around €25 million in each of the previous funds. As a repeating investor, the pension fund sees its investment as a strengthening of ties with new investors that also commit capital to PMM Global V.

On its purchase by Patrizia, Stampe said: “We of course had some considerations about a new owner taking over Sparinvest Property Investors [PMM]. However, we had talks with Patrizia both before and after the acquisition and experience the new fund being business as usual, with Patrizia’s broader network and support functions added on. That has all been very reassuring.”

Out of PKA’s €3.3 billion real estate assets only €300 million is placed in international investments. The pension fund has an ambition to reach real estate assets of €4 billion by 2020.