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Valad raises €180m in first close for Europe fund

The London-headquartered private equity real estate firm has won backing from several large institutional investors for its core plus and value added offering that is targeting parts of the UK and Germany.

Valad Europe has raised £150 million (€180 million; $240 million) in a first close for a core-plus to value add fund to be deployed in the UK and German real estate markets, it said today.

The London-based company which is led by Marty McCarthy and manages €4 billion of assets across Europe in 20 funds and mandates, has been backed by several large institutional investors including a new investor partner for its Valad European Diversified Fund.

In a statement, London-based Valad Europe said it would target up to €450 million of “good quality, well located assets” across the office, retail and logistics sectors in the UK and Germany. It is also telling investors that it would be geared at 50 percent to 65 percent and that the fund was targeting “strong credit tenants with non-institutional remaining lease terms”, with individual lot sizes of between €6 million and €24 million. The fund will also invest in small and medium sized portfolios.

One asset has been found for the vehicle already, which is a 26,242 square feet retail warehouse in Aintree, Liverpool, let to Wickes, a UK home improvement and building trade supplier. It has also exchanged contracts to acquire an office asset in the south east of the UK and has also secured a German logistics portfolio and a retail asset in Frankfurt.

Explaining the dynamics of the fund, David Kirkby, Valad Europe’s chief investment officer, said he envisaged a narrowing of the “prime-secondary spreads” during the fund’s life both in the UK and German real estate markets.

“In the UK, offices in regional city centres, especially in the south east, and retail warehouses currently provide good value investments, while in Germany, offices in the top and second tier cities and nationwide distribution warehouses are priced attractively,” he said. “We have actively targeted and secured our initial investments in the UK and Germany and our future pipeline of opportunities is strong.”

Valad Europe became a private company two years ago, during which time it has added around €1.6 billion of assets under management through new business funds and mandates. In the last nine months it has completed the acquisition of the investment adviser and asset manager operations of GE Capital Real Estate’s Polish Retail Fund, now known as the Valad Polish Retail Fund, with approximately €600 million in retail assets under management. It has also been appointed to manage the Mansford and Edeka retail CMBS mandates in Germany, the Landmark and Dutch Offices I and II portfolios in the Netherlands, and has secured two new separate account mandates, one for £100 million (€116 million; $158 million) with South African investor, Grindrod, and another with an undisclosed institutional investor.