Following an interim close, London-based manager Patron Capital Partners has raised €768 million for the seventh fund in its value-add and opportunistic fund series, according to SEC filings issued this month. The firm has raised an additional €120 million for Patron Capital VII Co-investment, per SEC filings.
With approximately €888 million in total commitments, Patron is at least two-thirds of the way toward its largest-ever fundraise. The London-based manager is targeting €1.2 billion for the fund, including between €100 million and €300 million via the co-investment vehicle, as previously reported by PERE. The firm expects to reach a final close for the fund at target by Q1 2024, according to market sources.
Patron Capital declined to comment on the fund. It is understood the first close for Patron Capital VII – €659 million in March 2023 per PERE data – was the firm’s largest on record. The manager employs a pan-European focus for its value-add and opportunistic strategy, and targets investments in residential, office and retail sectors.
Market sources told PERE that approximately 90 percent of commitments to the fund originate from existing investors in the series. This includes a $100 million commitment from the Arizona Public Safety Personnel Retirement System in August 2022, according to PERE’s database. In 2016, the Phoenix-based public pension also committed €35 million to Patron Capital V, which went on to raise a total of €805 million against a target of €750 million. Fund V had around 88 percent of its total capital called, and was generating a net IRR of 6.9 percent, as of September 2022, PERE performance data showed.
Patron held a final close on €716 million with the successor fund, Patron Capital VI, in December 2020. Additionally, the firm raised €128 million via a co-investment vehicle, for a total of €844 million raised against a target of €800 million.
Back in April, Keith Breslauer, managing director and senior partner at Patron Capital, told PERE the “buying window” for value-add assets in the UK was “starting now.” He expected dealflow to accelerate into the fourth quarter and the window to last 12-18 months. “Once that gets cleared up, people will price adjust, and that’s it.”
In a separate interview about Europe’s refinancing gap, Breslauer told PERE the firm typically leverages its investments with an average of between €30 million and €75 million in debt. He said the bank market remained robust for smaller opportunities, and that debt remained available from a variety of lenders, including foreign banks with a presence in the UK and challenger UK banks.
Competition heating up
In a sign of the increasing appetite for opportunistic and value-add strategies amid ongoing price dislocation in private real estate markets, when PERE reported in March 2022 that Patron was marketing Fund VI, its target of €1.2 billion made it one of the largest such fundraises focused solely on Europe at the time, according to PERE data.
Today, however, Patron’s fund is just outside the top 10 Europe-focused closed-end value-add and opportunistic funds in market by target size, in 11th position, per PERE data. The largest is New York-based mega-manager Blackstone’s eighth fund in its European series, which is looking to raise €10 billion. However, Patron Capital VII is the fourth-largest such fund being raised by a Europe-based manager, behind Paris-based Tikehau Capital’s €5 billion Real Estate Decarbonisation fund, Swiss manager Empira’s €1.5 billion Empira Residential Invest II, and Stockholm-based NIAM’s €1.4 billion target for Niam Nordic VIII.
Patron was founded by Breslauer in 1999 and manages €4.3 billion in total assets.
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