PGIM Real Estate has doubled the size of its first European value-add fund with its second effort after its strong performance encouraged investors to return with greater equity commitments. European Value Partners II attracted $1.1 billion of equity, including sidecar capital.
Raimondo Amabile, global chief investment officer and head of Europe and Latin America at PGIM Real Estate, said the latest fundraise demonstrated “continued investor confidence in the firm’s European strategy and platform”.
It is expected to be 70 percent deployed by the end of the year, according to an announcement by the firm on the fundraising. Fund II’s current portfolio was seeded 60 percent with last mile logistics and 25 percent with living assets across Europe. These include logistics developments in Paris, Berlin, France and the UK as well as residential developments in the UK and France.
The fund’s predecessor, European Value Partners I, closed on €457 million in 2016. That vehicle is 80 percent realized and “on-track to significantly outperform its target returns”, according to PGIM. PGIM deployed Fund I in office, residential and logistics assets in Germany and France.
Since the launch of Fund I in 2015, the firm has now completed 23 transactions totaling $3.5 billion across the UK, Germany, France, Spain and Italy from its value-add funds. More than 70 percent of these were sourced off-market, PGIM said.
In addition to the firm’s track record, PGIM’s fundraising effort has also benefited from investors’ confidence in post-covid recovery across regions. “Europe offers a compelling mix of value-add real estate opportunities resulting from market dislocation, a cyclical recovery and ongoing structural trends in the region,” Amabile said.
Apart from Europe, the firm has also had strong fundraising momentum in Asia-Pacific. In February 2021, the firm increased its €750 million hard-cap for its fourth value-add fund in Asia-Pacific as it saw substantial investor interest during the pandemic. PERE revealed that Asia Pacific Value-Add Fund IV was on track to close at €820 million after receiving investors’ consent to stretch the hard-cap during the pandemic.