Investors have continued to see strong performance from their Europe-focused real estate portfolios, with these funds producing an annualized return of 10.4% in the three years to June 2016. However, with high distributions returned over recent years, investors are finding themselves under-allocated to the asset class. To help investors evaluate where to place their capital in the current market – where there are significant variations between top- and bottom-quartile funds – Preqin’s Real Estate Online lists the most consistent top performing managers using since-inception fund-level net IRRs and multiples for over 1,600 closed-end real estate funds, including 253 primarily Europe-focused vehicles.
Denmark-based NREP has raised five top-quartile funds, achieving the highest average quartile ranking (1.00) and making it the most consistent Europe-focused private real estate fund manager. Interestingly, UK-based InfraRed Capital Partners is the only non-Nordic firm in the top six having raised three top-quartile and three second-quartile funds. Of the fund managers listed, NRP Asset Management is the only manager currently in market, targeting NOK 1.5bn for NRP 2016 AS. The vehicle will target modern commercial real estate in the Nordic region, excluding Iceland.
Common between all the top consistent performing managers in the table is the emphasis on local markets. Part of Nordic-based firms’ success is they are very focused, targeting a single Nordic country and extending, at maximum, to the Nordic region. Only one of InfraRed’s vehicles has had a broader mandate, with most of their funds focused on UK property.
*League table is compiled using funds for which Preqin has assigned a quartile ranking. An average quartile ranking is calculated for each firm that has raised at least three funds of the same fund type with at least one having been raised since 2011. Based on 26 firms and 111 funds fulfilling the selection criteria (capped at an average quartile ranking of 1.50).