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Central and Eastern Europe-Focused Private Real Estate Fundraising

by Carla Henry

  • 04 May 2012
  • PE

Since 2005, 74 Central and Eastern Europe-Focused funds have closed garnering a total of $12.1bn in capital from investors. The most successful year, in term of aggregate commitments, was 2007 with a total of $4.4bn raised by 22 funds closing during this period. Since 2007, there has been a decrease in the number of funds being raised in Central and Eastern Europe, dropping from 22 in 2007 to three in 2010. Central & Eastern Europe -focused funds fared comparatively better in 2011 than in 2010, improving from three funds closing raising $0.02bn in capital to four funds securing commitments of $0.4bn in capital in 2011. These figures suggest that momentum has been gathering in the real estate fundraising market, as investors return to making fresh commitments to funds in market, fund managers are able to hold a close and start making investments.

There are currently 17 private real estate funds in market targeting Central and Eastern Europe, seeking an aggregate $4.9bn. Thirteen of these funds are adopting a diversified property strategy, with an aggregate target of $3.3bn, while four funds are sector-focused. The most popular property focus in these areas is retail, with 10 funds focusing solely or partially on retail assets. There are currently nine funds on the road that include office investments as part of their strategy. Five of the funds currently seeking capital are targeting investments in commercial properties, while six funds have a preference for residential properties as part of their strategy.

Of the funds targeting Central and Eastern Europe currently on the road, five vehicles are seeking to raise $2bn to invest in assets in Russia, whereas three funds are targeting $0.9bn to invest in assets in Poland, compared to three Turkey-Focused funds seeking to raise the same amount of capital. One fund is targeting $0.2bn to invest in Ukraine.

There are currently two funds on the road targeting EUR 500mn in capital from investors. VTBC Ashmore Real Estate Partners I, managed by VTB Capital Infrastructure and Real Estate Investment Funds is utilizing an opportunistic strategy to invest up to EUR 500 million in commercial and residential real estate development projects in Moscow, St Petersburg and other substantial Russian metropolitan areas. Pradera Turkish Retail Fund, managed by Pradera, is seeking to raise EUR 500mn to invest in solid income producing shopping centres in the major cities of Turkey. The third largest fund currently in market is GE Polish Retail Fund, managed by GE Capital Real Estate. The fund is utilizing an opportunistic strategy to invest in properties throughout Poland.

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