UNITED STATES – JER Partners has raised €809m for its called JER Europe Fund III - the largest European investment fund so far for the company.
JER accumulated €128m in 1998 through its Europe Fund I and six years later raised a further €128m for Europe Fund II but this latest shift in interest comes, in part, as a result of pension fund money from major state funds.
The California State Teachers Retirement System is investing $100m while both the Kansas Public Employees Retirement System and State of Connecticut Trust Funds have each invested $35m.
Commenting on the fundraising, Malcolm Le May, president of JER Partners Europe, said there is now increasing demand for investment in Europe.
"There are a couple of reasons for us raising more capital. One is that a lot of pension funds in the United States are now more interested in investing in European real estate. Also, these investors typically have more capital to invest than their counterparts in Europe. Another factor is that the institutional investors in Europe now have more of an interest in value-added real estate. Last time around for fund raising, they were more looking at more of a core plus kind of strategy," added Le May.
The commingled fund is projected to deliver a net IRR of 15% for its investor on a 3-4 year holding period while leveraging should increase the total capitalization to $5.4bn.
A significant portion of the capital has already been committed as 13 transactions with an all-in cost of $1.1bn have already made, including the acquisition of three commercial properties for €18.5m in the northern Germany.
The investment strategy for Europe Fund III is to purchase existing undervalued assets and further improve their value through intensive asset management, as well as make some repositionings and development across all four main property types: office, industrial, retail and apartments.
JER Partners will be looking for properties in a variety of markets around Europe. This will include the United Kingdom, France, Germany, Finland, Sweden, Italy, Belgium, Switzerland and Turkey.
That said, the commingled fund may not have more than 20% of its portfolio located in countries outside of the European Union countries.