Pan-European investment manager Peakside Capital Advisors has already raised €160m in equity at the first close of the [[Peakside Real Estate Fund IV (PREF IV)]], a closed-end fund which will be focused on picking up on cancelled deals and auctions arising out of the market disruption caused by the COVID-19 crisis.
Peakside said the Peakside Real Estate Fund IV’s (PREF IV) first close was backed by institutional investors and family offices across Europe. The new fund's investors also include about 80% of the equity base of the predecessor fund which raised €200m in September 2018. The company said that returns on funds II and III had performed 'significantly above expectations'.
The main asset categories of interest for the new fund are logistics and light industrial properties, while the battered hotel and retail sectors may also throw up some compelling opportunities. At least one asset is currently in exclusivity, with further deals in the pipeline.
Overall, the Frankfurt-based Peakside plans to raise around €350m of equity for a total investment volume including debt of up to €900m for PREF IV.
The focus of the fund lies on German real estate investments impacted by pricing dislocations and opportunities with value-add potential within a price range of between €30m and €150m per investment, and is targeting a 15% annual IRR.
According to founding partner Boris Schran, "In the current environment, we are of course specifically looking at investments in the logistics and residential sectors. At the same time, we are expecting several opportunities coming out of market distortions in the wake of the Covid-19 pandemic, particularly in the retail and hotel sectors, and specifically for assets which lend themselves to conversion into office or residential use.
"Failed auctions or project developments with additional (re-)financing needs also offer attractive opportunities. Despite the increase of people working from home, we still believe in office as an asset class. Our pipeline is broad and filled accordingly."
Schran said the company had fared well over the past year, given the circumstances, but had had to slow down on fundraising for PREF IV as the pandemic took hold. "Of course transaction and leasing processes have slowed down also for us. But at the same time, we experienced a strong resilience in our tenant base,” he said. The rent collection rate across the assets, mainly offices and logistics properties, had stood up well at 97%, with two tenant falling into insolvency.
In January Peakside sold a commercial building in Berlin’s Steglitz district, the last property from the so-called Theodor portfolio, from PREF III. Since then, another asset in Frankfurt has been divested, marking the fourth sale of the total of six investments in PREF III.
Peakside was founded ten years ago as a management buyout from Bank of America Merrill Lynch. It currently manages assets worth more than €1.4bn on behalf of its institutional investors, with a team of 30 operating out of five offices across Europe.
