Moorfield Group is gearing up to launch two new funds as it looks to capitalise on the next phase of the UK real estate market.
Moorfield, which is one of the most experienced UK-focused private equity real estate firms, founded in 1996, is to launch its next generation fund possibly as early as Q2, and is expected to seek around £350 mln (€408 mln) of equity commitments from institutional shareholders. Moorfield Real Estate Fund V will be a continuation of the company’s series of closed ended funds with a value-add risk profile, and is in addition to a fund exclusively focused on retirement living via partner, Audley.
The company is also prepping an income fund focussed on the residential-for-rent sector, offering a longer-term dividend-yield to investors in what is set to be a hybrid or semi-open ended fund structure. The materialization of an income fund is recognition that the partners in the firm have been seeing attractive opportunities that do not necessarily fit within a value-add profile.
Moorfield declined to comment on its plans, but one advisor approached by PropertyEU confirmed it was familiar with the preparation of the two funds.
With the Covid-19 crisis being one year old, and the UK’s Brexit deal agreed just a few months ago, plenty of real estate players are looking at long-standing companies for signs of any deviation in strategy. However, for the new value-add fund, Moorfield is preparing materials suggesting it will not deviate in any material sense. This is being taken as a sign the company believes the pandemic is turning out to be an accelerator of pre-existing trends rather than a game changer.
Moorfield has been pursuing a ‘beds and sheds’ strategy for several years including deep experience in the alternatives sectors, with its investment approach supported by demographics, societal shifts and technological disruption. Having been an early investor in Build-to-Rent, Purpose Built Student Accommodation and Retirement Villages and a long-standing investor in logistics, it has broadened its investment themes to include the existing PRS, student houses, nursing homes and self-storage. The new value-add fund will have a three-year investment period, focused across these themes.
The company has been busy over the last 12 months. As previously reported, Moorfield has a £100 mln UK joint venture with Stor-Age, a South African self-storage Reit. The UK self-storage industry is said to be worth an estimated £800 mln a year. It also has a UK nursing home partnership with care home operator, Allegra Care, which was founded in 2018 and is owned by Seniors Living Group. The UK care home sector is valued at around £16.5 bn. In May 2000, the firm acquired a 77-show home portfolio from housebuilder, Avant and last week it announced a £50 mln JV with We Are Kin targeting the 1 million bed student housing market.
The company has been a net seller in recent years, selling its last remaining office investment co-incidentally at the start of the pandemic last March. It has returned more than 90% of the capital in its third fund. Its fund IV was raised in 2017/2018.