Fourth Resolution fund picks East End store for first buy

Former department store is first investment for fund with £650m target

Resolution Property has begun investing for Resolution Real Estate Fund IV, which has a £650m eventual capital raising target.

Resolution property chief executive Robert Laurence said 69-89 Mile End Road, a 100,000 sq ft former department store in London’s Whitechapel, E1, was “an excellent first acquisition for the fund”.

The income-producing building will be converted into a £30m mixed-use office, retail, leisure and residential project, in an area still cheaper than nearby trendy Shoreditch.

The private equity fund manager’s latest fund has had several closings, the most recent being a £50m commitment from Denmark’s PFA Pension, a new investor with Resolution.

Sources said it was likely to keep the fund open for new commitments until the end of this year. Some existing investors, which include a raft of US endowment funds and pension plans, are re-investing.

Fund IV’s target is slightly smaller than Fund III, which had its final closing in early 2008 with €809m of equity and took five years to invest.

Resolution has begun selling that fund’s assets. One of the first to go was Fund III’s first buy, Manchester’s Printworks leisure complex, for £100m.

Late last year Resolution was in talks with Lloyds and DRC Capital to refinance Printworks, but chose instead to sell it to Land Securities.

Laurence’s team are in advanced talks to buy another large Manchester  leisure scheme, Capital & Regional’s Great Northern Warehouse.

About half of Fund IV is expected to be invested in the UK. Hodes Weill is Resolution’s placement agent and Jones Day advised on the structure.