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Angelo Gordon Tops Goal Raising $843 Million Europe Realty Fund

  • New York-based firm sees opportunity in distressed assets
  • Second fund lures Pennsylvania, L.A. pensions among clients

Angelo Gordon & Co. has raised $843 million for its second Europe-focused real estate fund, surpassing its $750 million target.

AG Europe Realty Fund II will seek out complex, off-market opportunities in the U.K. and elsewhere in Western Europe, regions that are “still experiencing substantial levels of distress and dislocation,” said Anuj Mittal, co-portfolio manager of European real estate at the firm.

The pool is a successor to the New York-based alternative investment manager’s $570 million first European fund, raised in 2014, which had a projected gross internal rate of return of 24 percent, according to Los Angeles County Employees Retirement Association board minutes published in March. Along with the L.A. pension, other investors in the new fund include Pennsylvania Public School Employees’ Retirement System and the Texas Permanent School Fund, according to disclosures.

Investors in private real estate have expressed more appetite for Europe than any other region, according to data provider Preqin’s tally of recent searches. That’s in part because valuations in Europe haven’t caught up to the U.S., where managers say it’s getting increasingly difficult to find attractive opportunities.

Return Target

The new fund is targeting net returns of 14 percent to 15 percent and its strategy involves purchasing assets from owners “who lack the capital, patience or expertise to improve cash flow and value,” according to the L.A. pension. Areas of focus are the U.K., Germany, France and the Netherlands, the minutes show, and the fund may also invest in Ireland, Spain, Italy, Belgium and the Nordics.

The vehicle will zero in on “sub-performing” and distressed hotel, retail, office and residential assets, according to Angelo Gordon. The firm, which oversees $28 billion in assets, has about 40 so-called operating partners “who bring robust knowledge of their local markets, allowing us to uncover and capitalize on distinctive opportunities,” said Adam Schwartz, co-chief investment officer and head of real estate.

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