Senior managers take control of Merrill Lynch's European funds

New private equity real estate firm Peakside Capital has acquired management control of Merrill Lynch's key European property funds and portfolio of assets.

The main part of the deal involves taking over the Merrill Lynch European Real Estate Opportunity Fund (MLEREOF) from Bank of America Merrill Lynch (BofAML). The MLEREOF fund will be renamed Peakside Real Estate Fund I.

BofAML, created when bank of America acquired Merrill Lynch in late 2008, has decided that sponsoring real estate funds and direct real estate investments is not a core activity.

Peakside was established by former senior managers of the European real estate team within BofAML: Roger Barris, Stefan Aumann, Boris Schran and Mark Fenchelle. In addition to the senior managers, Peakside has employed 13 former members of the BofAML group and plans to hire an additional four staff, including Christoph Munte, formerly of Morgan Stanley, who will join as general counsel and a member of the Peakside Management Committee.

In a statement on Monday, Peakside said it has acquired BofAML's 100% indirect interest in the general partner of MLEREOF, which has a total of EUR 261 mln of capital commitments. Peakside has also replaced an affiliate of BofAML as the manager of MLEREOF.

Peakside has also acquired BofAML's interests in the general partner and investment manager of the Bosphorus Real Estate Fund I (BREF), which has a total of EUR 204 mln of capital commitments.

In addition, Peakaside announced the completion of a portfolio management agreement between it and an affiliate of BofAML for Peakside to manage a portfolio of European real estate investments held directly or indirectly by BofAML affiliates.

The fund portions of this transaction have been approved, with the requisite voting percentages, by the limited partners of both the MLEREOF and BREF funds. BofAML plans to maintain its limited partnership positions in both funds following the transaction.

The European team of the Real Estate Principal Investments group within BofAML was responsible for the management of the two real estate funds and the European BofAML portfolio.

Peakside has opened offices in the Cayman Islands, Switzerland, the UK, and Luxembourg. Peakside will provide investment advisory, deal origination and execution, asset management and fund management services in real estate across Europe, including CEE and Turkey, to qualified investor clients such as institutions and high-net-worth individuals.

Peakside plans to raise discretionary funds, but also plans to take non-discretionary investment mandates from investors.