Patron holds €880m final closing for Fund IV

The London-based private equity real estate firm has raised the largest opportunistic real estate fund for Europe so far this year.

London-based private equity real estate firm Patron Capital has finished fundraising for its fourth European opportunity fund with a final closing of more than €880 million – the most raised for a European real estate opportunity fund in 2012.

The firm said today the closing had significantly exceeded its expectations. Indeed, when PERE revealed in April 2011 that Patron was to launch Patron Capital LP IV, the final capital raising target then was closer to €800 million although Patron said today €100 million of the capital was raised as a dedicated discretionary co-investment pool.

Nevertheless, the capital haul is the largest by a firm focused on Europe in 2012 eclipsing the €719 million raised by Stockholm-based Niam for a Nordics fund and GE Capital Real Estate’s $773 million which it raised for a Polish retail fund.

Patron said the fund had attracted many investors which had invested in the firm’s previous funds although more than 40 percent of the latest fund’s investors were new. Investors included universities, institutions, private foundations and high net worth individuals from Europe, North America, Asia and the Middle East.

Patron’s strategy for Fund IV is expected to continue in the same vein as the firm’s previous funds through which it invested in more than 100 transactions across 50 distressed and undervalued property deals either on a direct basis, or as often was the case, indirectly by acquiring companies with significant property holdings. An investor in traditional sectors like offices, retail and industrial, Patron has not been afraid to invest in less popular sectors like hotels, leisure and healthcare also.

The firm said 15 percent of the money raised has already been deployed into the marketplace. Initial investments include positions in Luxury Family Hotels, the Motor Fuels Group petrol stations and a CMBS transaction in the Netherlands, Uni-Invest. Typical deals for the firm use between €30 million and €100 million of equity.

Fund IV is expected to generate absolute and risk adjusted returns from its investments of between 17 percent and 22 percent gross IRR deploying the capital over the next three to five years. According to Patron, its “war chest” could extend to as much as €3 billion when taking additional debt financing into account.

Keith Breslauer, who founded Patron in 1999, said following the successful capital raising, there was a “plethora of opportunities in Europe” currently and that the firm would adopt a clear, thematic approach.

He said: “The banking crisis, recession and real estate downturn has created exceptional conditions for Patron to source and execute investments with highly attractive absolute and risk-adjusted return potential over the Fund’s investment period.”

“Our focus is on becoming the market leader in distressed asset investment in Europe.”

Patron’s capital raising effort was assisted by placement agent Monument Group. Law firm Paul Hastings advised the company as fund formation lawyers.