US fund manager to partner Britons in bargain hunt

By Jennifer Rigby

Angelo Gordon to team up with Property Merchant Group and Investream in UK

US private equity fund manager Angelo Gordon is to invest a substantial proportion of its $2bn of property funds in the UK.

Angelo Gordon is combing the UK for opportunities and has lined up partnerships with UK property experts, such as Property Merchant Group and Investream, to work on the prospective transactions.

The privately owned fund manager is investing two funds: its $800m AG Core Plus Realty Fund II, of which it has already spent around 35%; and its $1.25bn opportunity fund, the AG Realty Fund VII, of which around 25% is invested.

Real estate managing director Adam Schwartz told Property Week: ‘We have been looking at the UK market for the last three or four years, but we could never make sense of the prices. Now, there are opportunities.’

The fund manager, which has $15bn of assets under management worldwide and was set up in 1988 by John Angelo and Michael Gordon, also anticipates opportunities in the rest of Europe, as well as its traditional base in the US.

Its $800m fund will invest in traditional, well-let assets and the opportunity fund will seek what the fund manager calls ‘subperforming real estate.’ It will invest in all asset classes but the initial focus in the UK will be on London.

Schwartz said: ‘We look at primary markets and so are focused first on London. But we are open to the rest of the country.’

Its modus operandi is to team up with local property companies to capitalise on their expertise – a business model that many expect to become more commonplace as wealthy overseas companies look for local investment expertise to find opportunities in the downturn.

Its relationships are not exclusive.

Schwartz said: ‘Our business model is structured on joint ventures. We team up with local investment partners in geographies we find appealing. We commit the bulk of the capital, and our partners run the day-to-day management.

‘We are talking to several parties, including Investream and Property Merchant Group.’

Property Merchant Group, which focuses on central London and has developed projects such as One Finsbury Circus in the City of London and Cavendish Gate on Regent Street in the West End, also traditionally works in partnerships.

Its chief executive, James Bowdidge, said: ‘Angelo Gordon is looking to invest in the sort of projects we undertake, and we are working on a number of potential transactions in London.’

Investream, which was set up by former Jones Lang LaSalle directors Mark Morris and Maurice Golker in 2002, has a £600m UK portfolio. (Jennifer Rigby, Property Week) http://www.propertyweek.com/story.asp?sectioncode=36&storycode=3144463

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