Meyer Bergman, the specialist in value-add strategies for retail-led real estate, has secured €816 mln of equity commitments from international institutional investors for its third fund and associated co-investment vehicles.
Meyer Bergman European Retail Partners III (MBERP III) has held its final close with commitments from 15 international pension funds, endowments and other institutions.
The capital raise was lengthy and not without challenges, according to those with knowledge of the fund. North American investors in particular have been spooked by a catalogue of retailers failing in the US, and concerns over how Ecommerce is affecting the asset class.
However, Markus Meijer, CEO at the company, said in a statement: 'There are fantastic investment opportunities in European retail real estate with the right approach and knowhow. This capital-raise endorses our strategy of identifying under-managed or underutilised properties to stabilise them so that they become resilient and defensive investments for long-term institutional owners.'
North American capital
North American investors accounted for 49% of the capital raised, with the balance coming from Europe, Asia and the Middle East. Investors in previous Meyer Bergman funds who “re-upped” provided 55% of the equity in the capital-raising.
MBERP III has made 11 investments to date, meaning around €410 million of the raised capital is deployed or committed. This figure excludes debt finance. The fund’s investments include: High street buildings with ground-floor retail units in prime locations in the centres of Berlin, Dublin, London and Milan; the Karstadt department store in the German imperial city of Potsdam; a portfolio of properties in central Oslo with two department stores; a mixed portfolio of retail assets across France; and an interest in the Portier development project in Monaco.
Greenhill & Co advised MBERP III as placement agent.
Not only has the company revealed the final capital haul for its Fund III but also says it will likely make more US investments in 2019 and in Europe will be looking at new strategies.
Opportunities in the US
Meijer concluded his statement by saying: 'We're currently looking at a number of potential acquisitions in France, Germany and the Nordic region and are aiming for the fund to be fully invested in about 12 months. For Meyer Bergman, next year will also be about looking at opportunities in the US, where we have already made three investments on behalf of clients, while in Europe we are considering new strategies that will draw on the expertise and experience of our growing team.'
Last year, Meijer wrote a long think-piece article in which he set out the issues uppermost in the minds of investors when it came to retail property and also how his firm thought about the asset class.
It began, ‘It is difficult to witness the turmoil in US retailing without being concerned that a similar pattern will unfold in Europe. There has been a steady flow of bad news coming out of the country: falling sales for some of the nation’s biggest chains, bankruptcies, surges in store closures, rising vacancies, a slide in rents and weaker share prices of the largest mall operators. We do not believe Europe will share a similar fate, however.
He continued, ‘There are key structural differences in bricks and mortar retailing in Europe that convince us that the storm across the Atlantic may remain largely localized and the impact in Europe will be moderate, particularly in urban locations. The key differences between the US and European retailing landscape is a surfeit of retail space: 24 square feet for each American, which is nearly five times that of the UK, six times that of France and 12 times that of Germany.
He also said, ‘For retail property owners and investors, their role is to create or be a part of an environment that attracts footfall by offering visitors a unique experience. Shopping centres are increasing their food and beverage provision, ensuring they have movie theatres and other leisure offerings to prolong shoppers’ dwell time. Landlords of main street retail properties have an inherent advantage if they invested in the right locations.’
Fund III was launched in 2015 when Fund II became fully invested. Fund II raised €740 mln.
The firm has added two investor relations professionals of late, to add to Tami Chuang, head of investor relations and business development.
In September it also announced the appointment of Herman Kok in a newly created role of head of research.
Meyer Bergman has added seven new members to its team in addition to Herman in the past 12 months, lifting its number to 38 in Europe. Among the senior hires this was Ben Williams as a principal focused on structuring, finance and transaction execution. In April, Gavin Green joined the firm as general counsel. The firm has also appointed Matthew Armitage as vice president in its finance, tax and legal team, while adding four new analysts: Marielle Duschene, William Lucas, Oskar Sköldberg and Alexandre Tuchmuntz.
