M7 Real Estate, the pan-European investor and asset manager specialising in multi-let properties, has raised over €40m of equity and loan note issuance for its second Continental European real estate fund.
Investors included a US-based multi-strategy private equity firm together with a number of existing M7 investors.
The fund, M7 European Real Estate Investment Partners II (M7 EREIP II) has purchased a portfolio of 42 assets in three separate acquisitions, including the Spring Portfolio that originated from a nonperforming loan. The purchases comprise a total of 135,688m2 of space and were made from three different vendors. The combined purchase price was over €82m representing an initial yield of approximately 11%, with a vacancy rate of around 25%. The assets are located throughout the Netherlands and comprise a mixture of multi-let office, local retail and light industrial property.
M7 will act as investment adviser and asset manager to the fund. Richard Croft, chief executive officer, M7 Real Estate said: “The portfolio that M7 have assembled for the fund provides a combination of exciting value add opportunities together with some longer let assets. This enabled us to source attractive senior financing and offer our investors either an attractive bond return or more value added equity return”.
The fund was structured by Goodwin Procter and Van Doorne acted as real estate legal advisers to M7 EREIP II. Ringstate advised M7 on the acquisition of the Spring portfolio. Deutsche Bank provided the senior debt facility.
M7 has also had a second close for its first European fund (M7 EREIP I) taking equity commitments to approximately €23m and has notarised a second portfolio taking the fund’s gross asset value to approximately €55m. A third and final close is expected in mid-November, to acquire the vehicle’s third portfolio. The fund was raised in June 2015 with a distinct focus on the German retail market and in October the purchase of eight retail properties including a shopping centre in Hanover and four supermarkets was completed. The portfolio was acquired for €46m with a gross initial yield of around 8.7% across 38,350m2 of lettable space.
M7 Real Estate’s 84 staff strong team operate a platform in the UK, Denmark, the Netherlands, France, Germany,Portugal and Poland. Established in 2009 and wholly owned by its senior managers, M7 already manages a portfolio of around 455 assets comprising 3.1 million m2 with a capital value in excess of €1.5bn. Its joint venture partners include Oaktree Capital Management, Starwood Capital, H.I.G Capital, Goldman Sachs International and M&G Investments.
