Valad Europe, the leading independent diversified real estate investment manager, announces the first successful close of £150 million (€180 million) equity for the Valad European Diversified Fund, with fund capacity of £375 million (€450 million). The Fund will invest in Core Plus / Value Add assets in the UK and Germany.
The Fund will employ between 50% to 65% leverage with strong cash-on-cash yields. Equity for the Fund has been provided by several large international investors including a new investor partner for Valad Europe. Debt financing will be sourced from a pool of lenders with whom Valad Europe already has existing relationships and who have supported Valad Europe on other mandates.
The Fund will invest in the UK and Germany, targeting good quality, well located assets, across the office, retail and industrial distribution warehouse/smaller logistics sectors, targeting strong credit tenants with non-institutional remaining lease term, with individual lot sizes of between £5 - £20 million (€6 - €24 million). The Fund will also invest in small to medium sized portfolios.
The Fund has already acquired one asset, a 26,242 ft² (approx. 2,438 m²) retail warehouse in Aintree, Liverpool, let to Wickes, the leading UK home improvement and building trade supplier. It has exchanged contracts to acquire a South East office asset in the UK and has also secured a German logistics portfolio and a retail asset in Frankfurt.
David Kirkby, Valad Europe’s Chief Investment Officer, commented: “We envisage a narrowing of the prime-secondary spreads during the Fund’s life both in the UK and German real estate markets and our local teams are seeking to purchase good value, high quality, and leasable assets with strong covenants.
“In the UK, offices in regional city centers, 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. We have actively targeted and secured our initial investments in the UK and Germany and our future pipeline of opportunities is strong.”
The launch of the Valad European Diversified Fund forms part of a strong period of growth for Valad Europe since becoming a private company two years ago, during which time it has secured approximately €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 secured two new separate account mandates, one for £100 million with South African investor, Grindrod, and another with an undisclosed institutional investor.
Valad Europe manages €4 billion of assets across Europe, across 20 funds and mandates, comprising 550 assets and 4,700 tenants, managed by local teams totaling 235 people in 21 offices and 12 European countries.