Exeter Property Group draws in investors for debut European fund

Exeter Property Group is close to raising up to €700m for its first European real estate fund, according to one of its investors.

The fund manager, which focuses on industrial property, is expected to reach a final close “shortly”, said Vince Smith, deputy state investment officer for the New Mexico State Investment Council (SIC).

New Mexico State, which is being advised by The Townsend Group, has approved a $75m commitment to the fund.

The US investor’s recent board meeting document shows that the fund is expected to raise between €500m and €700m in total. 

Despite its name, Exeter Europe Value Venture III is Exeter’s first commingled fund focused on Europe. Its predecessors are two European separate accounts established in 2014 and 2015.

New Mexico SIC is backing the new fund based on Exeter’s experience in the US industrial markets. This year it raised close to $1bn for its latest US fund.

“We think of them as a very strong manager, as their commingled funds in the US have produced double-digit level returns,” Smith said.

The European fund is expected to invest as much as half of the capital in the UK and Germany, allocating 15-20% to France and Benelux countries. Other potential markets include Poland, Czech Republic, Spain and Italy.

Using up to 65% leverage, Exeter will target assets that can produce a net internal rate of return in the low-to-mid teens.

New Mexico SIC is looking to capitalise on economic growth in Europe. “I think that the economy in Europe is anywhere from nine to 18 months behind the economic recovery in the US, so there is room for growth to happen in Europe in the future,” Smith said.

New Mexico SIC is below its allocation to international real estate. “Our long-term target allocation for international part of our portfolio is 30%,” Smith said. “Right now we are at 15%, with it being evenly split up between Europe and Asia.”

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