London-based DRC Capital has raised more than £487 mln (€598 mln) for its second European real estate debt vehicle.

London-based DRC Capital has raised more than £487 mln (€598 mln) for its second European real estate debt vehicle.

The total commitments at the final close for the European Real Estate Debt Fund II, (ERED II) surpassed the initial target fund size of £400 mln.

The capital was raised from a diverse group of institutional investors across Europe and North America. 'Significant commitments', DRC said, came from new investors, 'with a strong interest from pension funds'.

ERED II will continue the successful investment strategy of its 2011 vintage £300 mln predecessor fund, European Real Estate Debt Fund I (ERED I), of acquiring existing debt and originating new debt secured by European commercial property. The fund will lend against all commercial real estate property types.

DRC Capital, on behalf of the funds it advises, has recently executed loans in the office, hotel and retail sectors in Western and Northern Europe. DRC Capital has advised on the provision and arrangement over £650 mln of financings across 22 investments.

DRC Capital’s investment strategy aims to exploit the significant funding gap which has emerged as a result of the retrenchment of European banks. In 2008, the DRC Capital team pioneered the emergence of investment vehicles dedicated to real estate debt investing in Europe and has since become one of the most active mezzanine debt providers in European commercial real estate.

ERED II has already carried out six portfolio investments focusing mainly on the UK and Germany. ERED I made 16 investments in total, of which five have been fully realised to date.

Dale Lattanzio, managing partner of DRC Capital, said: 'It is an exciting time in the evolution of the commercial real estate debt investment sector in Europe and we are focused on capturing the investment opportunity on behalf our investors.'

Evercore acted as exclusive global placement agent for the fund raising process.