With the first half of 2019 completed, PropertyEU can reveal the top 10 capital formations of the six-month period.
The largest European real estate vehicle to officially reach final close in H1 was Henderson Park’s Real Estate Fund I. The $2.2 bn (€1.95 bn) vehicle closed at the end of Q2, having initially been launched in 2017. It knocks Tristan Capital off the top spot that it has occupied every week since the final close of its EPISO 5 fund was held in February in Q1.
The Blackstone Group is said to be nearing the end of raising its $10 bn (€8.9 bn) Blackstone Real Estate Partners Europe VI opportunity fund, which would smash its way to Number 1, but it had not been announced by the end of June.
Henderson Park is led by former Mount Kellett and Goldman Sachs professional Nick Weber, whose oversubscribed fund sailed passed its initial $950 mln target. Stone Point Capital and Kuwaiti institutions are cornerstone investors. Other commitments have come from Wafra Investment Advisory Group and Kuwait Investment Authority. Because the firm raced to having invested 56% of its capital six months from the end of its fundraising period, investors decided to top up commitments to short circuit the need for Henderson Park to go out and raise another fund.
As previously reported in the our Q1 analysis, Tristan’s EPISO 5 was 100% oversubscribed, meaning had it wanted to it could have raised an additional €1.5 bn. In total, the fund attracted 39 investors, 60% of whom were repeats. Some 55% of investors were from Europe, Asia and the Middle East and 45% from the US.
Sasha Silver, head of client development, said Tristan took the conscious decision before launching EPISO 5 to maintain it at the same size as predecessor EPISO funds despite the pipeline suggesting much more could be raised. EPISO IV collected equity commitments of €1.5 bn and closed in July 2015. The strategy is to generate 12-14% triple net annual returns by investing in Western and Central Europe across offices, logistics, retail and residential assets. Ric Lewis, co-CEO and chairman, said the firm was building an ‘all-weather’ portfolio with lower asset-level risk, less exposure to late stage markets and conservative financing in a ‘maturing market cycle’.
Benson Elliot Capital Management takes third spot with Benson Elliot Real Estate Partners V (BEREP V). That fund closed on its €800 mln target, also in Q1. In fourth position is ICAMAP’s Ivanhoé Cambridge-led low-carbon Paris office fund which has €750 mln at its disposal. Ivanhoé Cambridge is the cornerstone investor for the vehicle announced in Q2.
First-timers show up
There are no less than five first-time equity raises in the top 10 (meaning funds that are not follow-ons to previous vintages): ICAMAP, HIG Capital, Axis Retail Partners (whose sponsor is Italy’s Generali Group), and Germany’s GBI/Universal-Investment’s hotel fund backed by pension fund BVK.
The Carlyle Group – in 8th spot with €540 mln – is debatably not a new entrant because the Washington DC-headquartered firm has raised European funds before. However, so much has changed in the 11 years since Carlyle’s troubled Europe Real Estate Fund III fund (2008) that the new vehicle, Carlyle Europe Realty, could be considered a hybrid first-time equity raise.
Not only has there been a big time lapse since Carlyle’s last fund. There has also been the change in branding (the Europe fund is following Carlyle’s ‘Realty’ nomenclature). The Europe real estate team is completely new under the leadership of Peter Stoll, hired from The Blackstone Group in 2015, with only a handful of the original 40 Europe real estate investment professionals left in the team. Also, only 5% of the assets in that former $2 bn Fund III remain. Furthermore, there has been a change in branding (the Europe fund is following Carlyle’s ‘Realty’ nomenclature), and a completely new European investment strategy that leans towards specific targeted nationalistic/asset class themes.
Whether Carlyle’s new fund can be said to be first-time is further nuanced because Carlyle’s European real estate business has raised €320 mln via four co-investment funds from the end of 2016 and prior to launching Carlyle Europe Realty.