Frogmore announces stellar returns for second fund

By providing real estate debt financing alongside its more typical equity investments, the London-based private equity real estate firm has generated impressive returns for its second opportunity fund.

Frogmore, a London-based private equity real estate firm, has announced stellar returns from the first exits from its second opportunity fund, Frogmore Real Estate Partners (FREP) II.

The firm announced it had generated a 33 percent IRR and a 2.5x equity multiple from a loan to residential property company Dorchester Group, its third exit for the vehicle. The loan, used for a former US Airfield Base comprising 1,231 acres of freehold land, generated £45.5 million (€53.3 million; $70 million).

The loan was part of a refinancing by Dorchester arranged with Frogmore after the two companies originally purchased the land in 2009, the same year FREP II closed.

The exit was the third by Frogmore for FREP II, which is now fully invested, and demonstrates its flexible strategy

It follows the sale of Brittania Parks, 20 residential retirement parks across the south of England in December 2011, which generated an IRR of 37.5 percent and a 2x equity multiple. The firm also exited from Marconi House in the Strand, London. That apartment scheme fetched an IRR of 37.5 percent and an equity multiple of 1.6x.

All returns were announced on a gross, unleveraged basis.

Stuart Jenkin, director of fund management at Frogmore, attributed the returns to “careful underwriting and realistic risk adjusted business plans.”

“It also continues to demonstrate that for a value add manager such as Frogmore, the current market is creating the right environment for good returns on equity,” he said.

Frogmore came to market last year with the third of its value add funds. In June, PERE revealed how the firm was marketing Frogmore Real Estate Fund Partners III for which it hopes to raise £350 million in equity commitments.