Benson Elliot Capital Management, the UK-based private equity fund manager, has announced the final close of its pan-European fund Benson Elliot Real Estate Partners IV (BEREP IV). The fund will have over 鈧�700 mln of available equity, including more than 鈧�75 mln of co-investment which has been earmarked for the fund, according to its founder and managing partner Marc Mogull.
'So far, our new fund has acquired around 鈧�800 mln of assets across nine transactions, with a big chunk of that in Germany,鈥� Mogull said. 鈥榃e feel good about our exposure right now, not least the predominance of higher quality, income-producing assets in the portfolio. At times like these, there鈥檚 a great comfort in cash, especially with bond yields in continental Europe sitting below zero, and yields in the UK heading in that direction.'
The fund was oversubscribed, exceeding its initial target of 鈧�600 mln, according to Benson Elliot. Like previous funds, it will focus on offices, retail, multi-family and hotels, Mogull said. Around 90% of the group's investments have been in the UK, France, Germany, Italy, Spain and Poland.
Around 30 institutional investors have committed capital to the fund, including pension funds, SWFs and university endowments. Half of the capital came from US investors, with an additional 40% coming from European investors. The rest came from Middle Eastern and Asian investors. Interestingly, 60% of investors had already invested in prior funds.
Benson Elliot's objective is to offer its investors opportunistic returns with a value-add risk profile. 鈥楾here鈥檚 no pressure to deploy, but we鈥檇 expect the new fund to be fully-invested in 18-24 months. We don鈥檛 plan to launch any other funds this year. We're monogamous 鈥� we like to run one fund at a time,鈥� Mogull said.
It is too early to say how the Brexit will impact on property markets, according to Mogull: 'We need to see how Brexit plays out. We have a long-term focus, so we have the luxury of watching markets move over time. Right now, we鈥檙e focusing on the relationship between fundamentals and pricing. In times like these, they don't need to run in lockstep.'
However, he anticipates Frankfurt benefitting from the Brexit, given that some lenders are likely to relocate staff there. 'Markets are prone to overshoot, and a loss of confidence in valuations in the City 鈥� as demand drops, ERVs are re-rated and yields widen 鈥� could throw up investment opportunities. To do this job, you have to have conviction about long-term value. I鈥檝e been through more than a few cycles and always keep that Mark Twain adage in my head: "History doesn鈥檛 repeat itself, but it often rhymes"'.
