Angelo Gordon, Ares, line up new European value-add funds
Two big American-led real estate funds are gearing up to target western European sub-performing debt and assets over the coming months. Both companies have a strong local presence throughout Europe, and plenty of experience in raising funds to take advantage of special situations and alternative investment opportunities.
Angelo Gordon said that two US public pension funds are backing its latest European value-add real estate fund, for which it aims to raise $1.2bn (€1.07bn) in capital. Pennsylvania Public School Employees Retirement System (PSERS) and Minnesota State Board of Investment said they have pledged $100m and $75m respectively in the AG Europe Realty Fund III. Angelo Gordon itself will co-invest 3%.
The fund expects to have its final close next month. It will target western European sub-performing distressed debt, office, retail, hotel, industrial and residential assets.
Its predecessor fund, AG Realty Fund II also topped its target of $750m in May last year, ultimately raising $843m.
Meanwhile, NYSE-listed Ares management Corporation this month closed on its Ares European Real Estate Fund V SCSp (EF V) at €1.78bn, making it the largest Ares real estate private equity fundraising to date. It easily surpassed its target of €1.25bn, and also overtook its predecessor fund Ares European Real Estate Fund IV, which closed at €1.1bn in December 2014.
The fund will buy undermanaged or underfunded assets with distressed ownership structures or complex situations, actively managing them through to exit into the institutional market. It will target investments in residential, office, industrial and mixed-use assets, mainly in the largest and most liquid European markets including Germany, France, the U.K. and Spain.
About 40% of the fund’s equity has already been committed to nine investments across a diverse portfolio of mainly residential and office properties in Germany, Spain, Ireland, the Netherlands, Austria and the U.K. Notable transactions include the acquisition of a seven-building pan-European office portfolio from a major European institution, the aggregation of a scaled for-rent residential platform in Madrid, Spain, and the recent acquisition of a prominent mixed-use building at 68 King William Street in London’s City.