Invesco Real Estate, the Dallas-based investment firm, may have had separate accounts investing in value-added and opportunistic real estate in Europe over the years. To date, though, it has not organized a European value-added fund. However, that is about the change for Invesco as it launches its maiden fund targeting €300 million to €400 million of commitments from both existing and new investors.
Primarily known for core investing, Simon Redman, managing director of Invesco’s client portfolio management in Europe, said, “the timing was now right” for the firm to do more in the value-added funds space.
Invesco in Europe is led by Andy Rofe, as well as a team of five including Redman. The firm has $61.5 billion of real estate assets as of June 2014, of which just under $8 billion are in Europe. It has set up funds for the hotel sector, central Europe, southern Europe, the UK and pan-Europe in the past.
“The funds business is not new to us, but what we haven’t done is specifically looked at pan-European value-added real estate in a fund,” explained Redman. The broad strategy is to take real estate and “create core assets for the capital looking to buy real estate in Europe,” he added.
With eight offices in Europe, the firm boosted its capability in value-added real estate last year when it took on a real estate team from London private equity shop Doughty Hanson, which decided in 2013 not to raise a follow-up to its European Real Estate Fund II.
Kevin Grundy is now leading the Invesco team in making value-added investments and the firm has a good pipeline, said Redman. “If you take the elements that make up a good vintage opportunity, you have a natural exit in buyers with lots of capital looking for core real estate and relatively few local value-type investors, and us with a local platform and an international source of capital,” he explained.
In a twist, however, it emerged that Invesco was not the only firm contemplating raising a value-added European fund for the first time off the back of Doughty Hanson & Co Real Estate’s demise. As PERE reports on page 20, Julian Gabriel, head of real estate at Doughty Hanson, is joining Cornerstone Real Estate Advisors as head of investment in Europe. It is understood his appointment is part of a plan to raise a European value-added fund, effectively putting Cornerstone with Gabriel in direct competition with Invesco and Gabriel’s former team members.
Still, Redman is not focused on that. “We took on eight people of the core Doughty team, which is pretty much all of it,” he said.