DRC Capital has said it raised more than £487m (€597m) for the final close of its second European Real Estate Debt Fund (ERED II), exceeding the £400m target size that had been set for the fund.

The fund manager said the capital came from a diverse group of institutional investors across Europe and North America.

It attracted several big commitments from new investors, the firm said, with strong interest from pension funds.

The new fund will continue the investment strategy of its predecessor ERED I, launched in 2011 with £300m, the firm said.

The first fund buys existing debt and originates new debt secured by European commercial property.

Like ERED I, ERED II will lend against all commercial property types, the firm said, adding it had recently executed loans in the office, hotel and retail sectors in Western and Northern Europe on behalf of the funds it advises.

“DRC Capital’s investment strategy aims to exploit the significant funding gap that has emerged as a result of the retrenchment of European banks,” the firm said.