On Monday, Swedish private equity firm EQT announced that it has successfully closed its second real estate fund (EQT Real Estate II) at a hard cap of EUR 1 billion (about $1.2 billion) in fee-paying assets under management, fully 33 percent above its EUR 750 million (about $884 million) target.
New and existing international blue-chip investors from Europe, the Nordic countries, Asia, North America and the Middle East, comprising public and corporate pension funds, insurance companies, sovereign wealth funds, global asset managers, commercial banks, foundations, and endowment, family offices and private wealth channels have committed to this second thematic investment fund.
The fund will focus on direct and indirect controlling investments in high-conviction, value-add opportunities in real estate assets, portfolios, operating companies and joint ventures. Equity investments will range from EUR 40 million to as much as EUR 200 million, focused primarily in European logistics and residential real estate.
According to a company statement, Real Estate II will execute “a thematic investment approach with a focus on attractive investments which are decoupled from the financial cycle.”
These potential targets, supported by key secular growth drivers and illustrative of EQT Real Estate’s high-conviction investment thesis, include urban logistics and warehouse assets that are expected to benefit from an ongoing shift in retail spending towards e-commerce and residential investments.
Additionally, the fund will consider opportunities in new build for-rent housing, student housing and senior living, which benefit from continued favorable supply-demand dynamics, urbanization and population growth.
In addition to actively evaluating deals in Germany, Spain, Italy and Benelux, EQT Real Estate II has committed capital into four such high-conviction, social impact-focused investment programs in Sweden, France and the U.K.
These include a majority stake in the publicly listed Stendörren Fastigheter, a portfolio of 733,000 sqm of operational logistics and urban warehouse real estate across 124 assets in and around Stockholm, and a further 666,000 sqm of consented land on which the company plans to build 800 apartment units and additional logistics and urban warehouse assets.
EQT has also invested in the Svenska Verksamhetsfastigheter portfolio, comprising 28 urban logistics properties in college towns throughout Sweden with a pipeline of additional add-on acquisitions.
In France, EQT has invested in Nest, a residential solutions platform that will deliver 4,000 purpose-built apartment units to address the housing and services needs of people with physical disabilities.
Finally, Real Estate II has committed capital to the Saturn project, a residential joint venture that will deliver 3,000 newly built, high-quality rental homes in affordable parts of Greater London.
Commenting on the successful fund close, EQT CEO and Managing Partner Christian Sinding said, “Real estate is one of the most exciting growth areas for EQT and the success of this fundraise is a reflection of EQT Real Estate’s ability to source attractive opportunities and then develop sustainable, future-proofed assets, while delivering strong results to its investors. We look forward to continuing to build on that success.”
EQT Partner and Head of Real Estate Robert Rackind added, “We would like to thank all of the investors – both new and existing – for their support of EQT Real Estate II. As we are entering a new investment cycle, we see a strong pipeline of attractive value-add investment opportunities that fit EQT Real Estate’s thematic approach to investing primarily into Europe’s key cities and in particular in our current focus on ‘beds’ and ‘sheds’ assets that are benefitting from positive growth drivers and secular trends.”
According to EQT, more than 35 percent of commitments closed after February 2020, at the height of the global covid-19 lockdown, showcasing investor appetite for the fund, as well as EQT’s technology infrastructure. Following last week’s announcement of a record, remote fundraise at Swedish peer fund Nordic Capital, EQT noted that the latter portion of the capital raise was conducted digitally.
