Peakside Capital and its affiliates today announced that they are launching a new real estate private equity firm and concluding a transaction with Bank of America Merrill Lynch (“BofAML”) involving the following elements:
- the acquisition by Peakside of BofAML’s 100% indirect interest in the general partner of the Merrill Lynch European Real Estate Opportunity Fund L.P. (“MLEREOF”), which has a total of EUR 261 million of capital commitments;
- the replacement of an affiliate of BofAML with Peakside as the manager of MLEREOF;
- the acquisition by Peakside of BofAML’s interests in the general partner and investment manager of the Bosphorus Real Estate Fund I (“BREF”), which has a total of EUR 204 million of capital commitments; and
- the completion of a portfolio management agreement between Peakside and an affiliate of BofAML for Peakside to manage a portfolio of European real estate investments held directly or indirectly by BofAML affiliates.
The Fund portions of this transaction have been approved, with the requisite voting percentages, by the limited partners of both the MLEREOF and BREF funds. In connection with the transaction, MLEREOF will be renamed “Peakside Real Estate Fund I”. BofAML plans to maintain its limited partnership positions in both funds following the transaction.
Peakside has been newly created by the former senior managers of the European team of the Real Estate Principal Investments group within BofAML, consisting of Roger Barris, Stefan Aumann, Boris Schran and Mark Fenchelle. The team was responsible for the management of the two real estate funds and the European BofAML portfolio, In addition to the senior managers, Peakside has employed 13 former members of the BofAML group and plans to hire an additional 4 persons, including Christoph Munte, formerly of Morgan Stanley, who will join as General Counsel and a member of the Peakside Management Committee.
Peakside has opened offices in the Cayman Islands, Switzerland, the United Kingdom, and Luxembourg. Peakside will provide investment advisory, deal origination and execution, asset management and fund management services in real estate across Europe, including CEE and Turkey, to qualified investor clients such as institutions and high-net-worth individuals. Going forward, Peakside plans to raise discretionary funds, but also plans to take non-discretionary investment mandates from investors.
Commenting on the transaction, Roger Barris, Chairman of Peakside, said “Peakside will launch as a mid-sized manager with a strong track record, an experienced team and the investment capacity needed to take advantage of the opportunities that are rapidly emerging in real estate in Europe. This is a great opportunity for Peakside, our employees and our investors. At the same time, the transaction will assure continuity of management for the two funds and the other BofAML real estate investments in Europe, helping to maximize the value of these assets.”
Jim Forbes, BofAML Global Principal Investments executive, said “BofAML has made the decision that the business of sponsoring real estate funds and direct real estate investments is not a core activity. We considered many alternatives for these assets, and driven by our confidence in the Peakside team, we concluded that the best option, in our capacity as a limited partner in the funds and the owner of the proprietary assets, is to allow the Peakside team to continue to manage the funds and the legacy European real estate assets as an independent company.”