New Jersey Division of Investment and Virginia Retirement System are investing in a value-added Meyer Bergman fund targeting Europe’s high street retail.
New Jersey is considering a $50m (€36.8m) commitment to Meyer Bergman’s European Retail Partners II fund, while Virginia has already committed €60m.
New Jersey said it believes there is opportunity in high street property, with strong performance in Europe’s main markets driven by tourism and personal wealth. Shortage of supply – along with modest valuation declines – were also deciding factors for New Jersey.
Meyer Bergman, which is looking to raise €750m for the fund, will co-invest up to 2% or €10m. Projected net IRR for the fund is 18%, with a 1.7x net equity multiple on invested capital.
The fund, which is buying properties in need of refurbishment, has been seeded with nine assets in western Europe. New Jersey said its investment staff and real estate consultant RV Kuhns believe the seed assets are of “extremely high quality”. Visibility of the portfolio, it said, significantly reduces risk.
Germany, France, the Nordics, UK and Benelux, as well as the Czech Republic and Poland, are being targeted by the fund. Meyer Bergman is also looking at opportunistic markets of Spain, Ireland and Italy.
Virginia’s commitment is its second this year, having made a €75m commitment to the Europe Real Estate Fund IV in March. The fund, which does not have a targeted allocation for real estate, had invested $4.7bn in the sector as of March this year. The asset class accounts for 7.3% of its $63.9bn total plan.