Moorfield Group has successfully completed its final close for Moorfield Real Estate Fund III (MREFIII) having raised up to £500m in equity capital across three tranches.
The equity capital total is comprised of £250m of discretionary equity capital; a second tranche of more than £100m of non discretionary, co-investment equity capital; and a third tranche of up to £150m in joint venture capital.
MREFIII expects to leverage investments on a deal-by-deal basis, at a conservative 50% on average, providing a total spending power of circa £1bn over the next three years.
Just before Christmas, Lone Star acquired the bulk of Moorfield’s first two maturing, closed-ended UK private equity real estate funds – MREF and MREFII – for approximately £1bn as part of the funds orderly windup and return of capital to investors. For a detailed breakdown of these two funds’ assets, please click here.
Lone Star and Moorfield will complete the deal in February.
Moorfield raised £265m in equity for MREF in 2005 and £389m in equity for MREFII in 2007, therefore, its MREFIII fund is the UK-focused private equity real estate fund manager largest closed-ended fund to date.
The MREFIII investor base consists of a group of investors split broadly equally between existing and new relationships with the investors coming from the US, Europe and Japan.
Marc Gilbard, chief executive officer of Moorfield said: “We are satisfied with this successful fund raising which gives MREFIII the flexibility to deploy a significant amount of leveraged capital in the UK real estate markets.
“We are grateful for the support and confidence of our existing and new investors and are pleased to have been able to expand our investor base in terms of geography and investor type.”
MREFIII is a UK focused opportunistic/value-add fund with a targeted risk adjusted internal rate of return (IRR) of c.15-20% and an equity multiple of c.1.5x-2.0x. Moorfield looks to identify investment opportunities where equity returns can be enhanced with active asset, operational and financial management.
MREFIII will be targeting sectors and sub-sectors with attractive supply and demand dynamics.
MREFIII’s most recent acquisition is Aurora in Ealing, West London, which was bought from Threadneedle Investments for £22m in an off-market transaction in late December 2014.
Aurora is a prominent Grade A headquarters office building in the Ealing office core. Built in 1996 and comprising 51,943 sq ft over the ground and 4 upper floors, Aurora is let in its entirety to market research company Dunnhumby until May 2016.
Charles Ferguson Davie, chief investment officer from Moorfield said: “Aurora is an excellent addition to MREFIII’s portfolio; it is a high quality property in an already strong location that is going to continue to improve with the support of Crossrail.”
MREFIII is working in joint venture with XLB Property on Aurora and JLL advised Threadneedle Investments.
Aurora joins four other MREFIII UK investments including 100 Barbirolli Square in Manchester, Quartermile in Edinburgh, a Private Rented Sector (PRS) scheme at Queens Dock in Liverpool, and the Energy and Innovation Parks in Aberdeen.