M7 Real Estate has announced it has received investor commitments totalling over €80m at the first close of its latest European investment fund M7 European Real Estate Investment Partners III (M7 EREIP III or the Fund). This marks the largest fund close achieved by M7 as a business to date. Simultaneously, M7 has exchanged contracts on €130m worth of acquisitions for the Fund in four separate transactions, comprising three portfolios and one single asset.
M7 EREIP III has a Value Add-led strategy and targets assets offering sustainable income streams and asset management opportunities in the retail, office and the multi-let industrial sectors in both Germany and the Netherlands.
The four acquisitions comprise 21 assets with the combined portfolio, providing an initial income of €13.2m from 143 tenants. In line with the Fund’s strategy, the 21% vacancy rate provides a significant opportunity to drive income through lettings, while also providing some modest development opportunities.
The assets include six multi-let offices totalling 21,300m² of rentable space in leading secondary cities in Germany - Bonn, Dortmund, Duisburg, Hannover, Kassel and Koblenz, with a weighted average unexpired lease term of 5.4 years. Within this sub-portfolio, the primary tenant is insurance company HUK Coburg, which accounts for 70% of the income across the German offices.
The remaining 15 assets are located in cities across the Netherlands, including Rotterdam, Delft, Arnhem and Assen, comprising 11 offices and four retail properties.
Richard Croft, M7’s chief executive said “As our largest to date, this fund raise from institutional and family office investors, is another milestone in the continued expansion of our business. The first close for M7 EREIP III is also a strong endorsement of our continued ability to both raise capital and to utilise our pan-European investment and asset management platform to immediately deploy those funds into investments across multiple sectors, where we see an opportunity to add value through asset management.
“We are intending to have a second close during the first half of this year and are targeting a gross investment capability of circa €330m for the Fund. We have already identified and/or are under offer on a number of other transactions and we intend to be fully invested by end Q2 2016.”
David Ebbrell M7’s head of transactions added: “These properties present plenty of opportunities to add value through straight forward asset management initiatives and selected capital expenditure against a background of improving occupier sentiment, a pick-up in demand from occupiers and a shortage of good quality space in prime locations”
