Moorfield Group is to launch a fourth UK property fund with a fundraising target of £350m.
With gearing of 55-65% it will likely have total firepower of around £900m. The fund manager is aiming to complete a first close of the eight-year fund before the end of 2017 and target value add/opportunistic returns of 15-20%. It will look to raise funds from the US, Europe, Japan, South Korea, Malaysia, Singapore and Hong Kong.
Moorfield Real Estate Fund IV will have a “beds and sheds” focus targeting student accommodation, build-to-rent and last-mile logistics. Over a three-year investment period it will also look to acquire and develop major infrastructure assets and undertake mixed-use developments where the variety of uses drives footfall.
Moorfield’s third fund owns more than 1,000 bedrooms and flats in each of the student accommodation and built to rent sectors and the fund manager anticipates holding at least as many in the next fund.
“Everyone is now seeing these themes but there are differences between discussing it and doing it. You can’t flick a switch and have a 1,000-bed build-to-rent portfolio overnight because that comes through multiple redevelopment and refurbishment opportunities and that is the same in student accommodation or retirement living,” says Marc Gilbard, chief executive.
MREF IV will avoid the retail sector and offices, particularly those in central London.
“We became nervous about retail and the changes to it a long time ago, which is when we looked at logistics,” Gilbard says.
“We are not that keen on offices currently, given where rents and yields have got to. If there is the opportunity to reposition an asset underpinned by infrastructure investment that we believe is under-rented then we will do that,” adds Charles Ferguson-Davie, chief investment officer.
Graham Stanley, who co-founded Moorfield in 1996 with Gilbard, no longer has a day-to-day operational role with the firm but remains a major shareholder, sits on its board and is involved with sourcing investment opportunities.
The business has around £2bn of assets under management. Its third fund, which reached a final close at the beginning of 2015, is now fully invested in around £700m of assets. Its first and second funds are now fully divested, with Lone Star having purchased £1bn of assets from the funds in early 2015, with Moorfield continuing to manage those assets the Texan investor still holds.
The only assets Moorfield retained from its first and second funds was its Audley retirement villages business, for which it raised £200m of new capital in 2015 and sold into a new vehicle – Moorfield Audley Real Estate Fund.
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