Private Equity News & Analysis

Doughty Hanson closes €560m real estate fund

The second real estate vehicle from the UK-based private equity firm will largely stick with the investment strategy of its predecessor.

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Doughty Hanson has closed it second private equity real estate vehicle with commitments of €560 million ($707 million). Much like the firm’s first real estate fund, Doughty Hanson & Co. European Real Estate II will target investment and development opportunities in France, Germany, Italy, the UK and the Nordic countries.

“We have a strong team of real estate professionals and the strategy for fund two is more of the same, investing throughout Europe and creating value through active management,” John Howard, head of real estate for Doughty Hanson, said in a statement.

The current vehicle will be Doughty Hanson’s first without Marc Mogull, a founding partner of the UK private equity firm’s real estate arm and one of the drivers behind its investment strategy along with Howard. Since his high profile departure two years ago, Mogull has gone on to his own private equity real estate firm, Benson Elliot Capital Management.

The strategy for fund two is more of the same.

John Howard, Head of Doughty Hanson Real Estate

The firm’s first European real estate vehicle, which drew $630 million (€521 million) in commitments, was one of the first pan-European real estate funds ever established when it began investing in 2000. So far, realizations from the inaugural vehicle’s 21 investments have generated a return of more than three times the initial equity investment and a gross IRR of 42 percent, according to the firm.

Doughty Hanson’s latest real estate offering is already 20 percent invested, with €110 million of capital committed to four projects. The fund has acquired a portfolio of 19 commercial buildings at Kings Hill Business Park in Kent, England through a joint venture with Liberty Property Trust; high quality Italian residential developments in Rome and Brescia; and a portfolio of six office properties in the Kista area of Stockholm.

Doughty Hanson and its real estate partners have committed to invest €60 million in the new fund. Investors from throughout the globe include both limited partners in the first European real estate fund and others from Europe, the US, Canada, Australia and the Middle East.