Siguler Guff, which last week finished raising US$877 million for its second distressed real estate fund, expects to invest about 40 per cent of the money in Europe, more than double the percentage in its first offering.
Real estate markets in Western Europe were three years behind the United States in their recovery, giving them more scope for gains, said James Corl, managing director and head of real estate at the New York-based private equity firm.
"We're very focused on Spain right now," said Corl, referring to plans for the Siguler Guff Distressed Real Estate Opportunities Fund II. "The deal flow is the most rapid and voluminous" following the 2012 creation of an entity, Sareb, to liquidate bad loans.
Siguler Guff is joining larger US private equity real estate firms in the hunt for European property as banks sell troubled loans. The company is looking for smaller deals excluding auctions, seeking higher returns. Europe is claiming a large share of attention from distressed-property investors globally because prices in the US have rebounded faster.
The new Siguler Guff vehicle invested in other funds and made direct investments with operating partners, putting in an average of US$12 million to US$15 million of equity per deal, said Corl, the former chief investment officer of Cohen & Steers. It is the largest US fund raised for real estate fund-of-fund investing.
We're very focused on Spain right now. The deal flow is the most rapid and voluminous [since 2012]
The fund started making deals as it won capital commitments starting in August 2013, and was about 70 per cent invested, Corl said.