King Street Capital Management has announced the final close of its European Real Estate Special Situations Fund II (ESS II), citing “strong investor demand” in a market characterised by “scarce” transparency and liquidity.
The oversubscribed fund hit its hard cap of $950m (£693m) of capital commitments within 12 months, attracting a globally diversified investor base across North America, Europe, Asia, and the Middle East, with 50 per cent of commitments coming from re-ups of the firm’s predecessor ESS vehicle and existing King Street real estate investors.
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ESS II targets situations where traditional capital has retrenched, with the objective of accessing institutional-grade real estate at compelling valuations, according to King Street.
The fund’s remit enables it to invest across Western Europe, with a focus on high-quality assets that are “temporarily mispriced” due to market liquidity, as opposed to fundamentals.
“The strong investor demand for ESS II reflects confidence in King Street’s ability to deliver innovative financing solutions in a market where transparency and liquidity remain scarce,” said Brian Higgins, founder and managing partner of King Street.
“Amid historic dislocation, we see a clear path to recovery and believe ESS II is well-positioned to capitalize on a generational opportunity in European real estate.”
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Among the fund’s recent investments are the Four Seasons Rome, the Bauer Hotel Venice, and Arlington House St James.
“As traditional lenders pull back and capital remains scarce, we’re able to deploy flexible capital and access landmark assets through proprietary, off-market channels,” added Paul Brennan, partner and co-head of real estate, with responsibility for leading the European business at King Street.
The global alternative investment firm manages more than $29bn in assets across public and private markets, while King Street Real Estate focuses on debt and equity investments in special situations and thematic platforms.
Since its inception in 1995, King Street has completed transactions totalling in excess of $20bn in real estate securities and real estate-related investments.
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