M7 Real Estate has gained backing from a Hong Kong-based family office that will give the company a capital-raising capability in Asia and help it establish a substantial new pan-European fund.
Market sources, unconfirmed by fund and asset manager M7, suggest that one of the world’s best-known real estate dynasties, the billionaire Kwok family, is behind the deal.
The Kwoks are the major owners of one of Asia’s largest property companies – listed giant Sun Hung Kai Properties – but it is understood that the company itself is not involved in the M7 deal.
The deal is a strategic partnership that will see the Hong Kong family office invest in high-yielding real estate across Europe alongside M7. It has given M7 a distribution capability for its funds in Asia, which will be used to raise capital for the new European fund.
The family office has also agreed an option to acquire 25% of the business, and two family office representatives have joined M7’s board.
The wider deal was born out of an initial agreement by the new investor to refinance and enlarge a £30m Jersey-listed bond, the majority of which M7 raised in 2013, to allow it to co-invest with partners.
As a result, M7 will be able to use the bond to buy assets on its own balance sheet and increase its level of co-investment in joint ventures and funds.
M7 chief executive Richard Croft said: “This is a highly exciting development for the business and we are looking forward to working with our new partners to expand the business over the next few months.”
M7 is on the brink of closing its second European pooled fund, the €80m (£58m) M7 EREIP II, as well as a launching a dramatically larger third fund. This fund will focus on value-add and distressed opportunities across various sectors.
The deal is another landmark for M7, which has had a spectacular rise since its establishment in 2009 to now have joint ventures with partners including Goldman Sachs, Starwood Capital Management, M&G and Oaktree Capital Management. It has €1.3bn (£950m) of assets under management across Europe and is best known for its expertise in the multi-let industrial sector but also specialises in retail, offices and business parks.
It has offices in the UK, Germany, Denmark, the Netherlands, Poland and France, from which it undertakes hands-on asset management. Next month it is due to open an office in Lisbon.
M7 refused to comment on the identity of the investor.
