Peakside Capital has acquired a commercial and residential building in Germany on behalf of its third value-add real estate fund.

Peakside Real Estate Fund III (PREF III) bought the asset in Frankfurt’s City West.

The 9,270sqm commercial and residential building has been undermanaged in recent years and the purchase price is below replacement cost, the specialist European investment manager said.

Peakside said the asset is currently sitting with a substantial 50% vacancy on the commercial space which Peakside will look to reduce on completion of a light refurbishment.

The most recent purchase, which is the third acquisition for the fund, takes the equity invested by PREF III to date to over €50m.

PREF III’s €150m total equity raising target is expected to be substantially exceeded, Peakside said.

That provides PREF III with €500m to €600m of total investment firepower. In addition, PREF III will invest in selected co-investments that it manages.

Boris Schran, a founding partner of Peakside Capital, said: “Our most recent Frankfurt transaction fits firmly within our strategy of acquiring distressed or poorly managed assets in good or evolving micro-locations at attractive entry points.

“With our strong track record of leasing and a thriving Frankfurt occupier market, we are confident that we can quickly improve on the operational performance of this property.”