Deutsche Finance International closes debut fund and builds €856m portfolio
Deutsche Finance International (DFI) has finished raising capital for its debut fund, enabling it to assemble a portfolio of European real estate worth €856m.
The London-based fund manager, which specialises in operational real estate, raised €436m of equity for DFI European Value-Add Fund and co-investments.
The fund and co-investors – including German institutions Bayerische Versorgungskammer and Versicherungskammer Bayern Group – were behind the £296m acquisition of the Olympia London exhibition centre in 2017.
Insurance companies, pension funds, family offices and financial institutions from the US and Europe have committed capital to the fund, either directly or in the form of co-investment.
DFI said that with the equity raised, along with “conservative leverage” and “potential further co-investment”, meant the company would be able to make further investments and it expected to conclude two more deals in the coming months.
The strategy involves investing in small and mid-cap properties and special situations, predominantly in Western European gateway cities.
The fund focuses on operational real estate with a view to capturing opportunities arising from real estate’s evolution to ‘space-as-a-service’.
Investments have included the aggregation of multifamily housing in Barcelona and Madrid, the creation of a student accommodation platform in Copenhagen, a student accommodation asset in the UK, the refurbishment of an office in Lisbon.
The fund’s largest asset – which is owned in conjunction with co-investors – is the 133-year-old Olympia London exhibition centre and the 14-acre site in which it is located, which was acquired in from Capital & Counties two years ago. Planning approval has been secured to create a new mixed-use cultural quarter.
Frank RoccoGrande, co-founder and co-managing partner of DFI, said: “The level of support we have received for our first fund is a thorough endorsement of our differentiated strategy, the quality of our team and our ability to source high quality investments off market.
“We have strong ambitions for the platform we are building and, having only launched in 2017, set a clear and deliberate strategy for our maiden fund to be more measured in size and with a higher proportion of co-investment.
“This approach has allowed us to put our clients’ capital to work quicker, without compromising our investment strategy or ability to execute larger transactions.”
Gavin Neilan, co-founder and co-managing partner, said: “To assemble the fund’s seed portfolio, we predominantly pursued thematic investment strategies into operational value-add real estate in gateway cities.
“By applying our asset management skills we have already begun to drive value and cash flow through a range of initiatives including active leasing, capex investment and building portfolios.
“We have a number of further deals that we expect to transact in the near future, as well as strong pipeline of additional opportunities under consideration.”
DFI is part of the Deutsche Finance Group, a global investment management firm that specialises in private market real estate and infrastructure investments.