AEW raises $550m for Fund VII

AEW Capital Management has completed fundraising for AEW Partners VII, hitting the fund’s hard cap of $550 million.  AEW Partners is the firm’s closed-ended opportunistic real estate fund series, which it began in 1988. The fund exceeded the capital raise of its predecessor, AEW Partners VI, which gathered a total of $424 million in commitments in 2010, but it was smaller than the $686 million AEW Partners V and $750 million AEW Partners III.

AEW held a first close for Fund VII in March 2013, collecting $89.2 million, and had raised $174.7 million, as of February according to filings with the US Securities and Exchange Commission. Among the earliest investors in the vehicle were the Illinois Municipal Retirement Fund and the Dallas-Fort Worth Airport Board, which pledged $25 million and $10 million respectively in October 2012. Other limited partners include the San Francisco Employees Retirement System, which designated $40 million in February 2013; the Municipal Employees’ Retirement System of Louisiana, which committed $12 million in March; and the Ohio Police & Fire Pension Fund, which agreed to invest $50 million last month.

Fund VII, which will focus on top-tier markets in North America, will acquire and recapitalize undermanaged but well-located assets with distressed capital structures. “Almost half of the fund already is invested or committed, and we continue to have a very robust pipeline of opportunities,” said Marc Davidson, portfolio manager of the AEW Partners funds, in a statement.  He added that the majority of the fund’s investments to date were purchased from owners that were under pressure to sell or recapitalize.

Among Fund VII’s more significant transactions was a joint venture with Sealy & Company, a Dallas-based commercial real estate investment and operating company, to acquire value-added industrial assets in the southwestern and southeastern US. Announced in February, the partnership’s initial investments include a 20-building industrial portfolio in Texas and a Class A industrial property in Atlanta.

Founded in 1981, AEW and its affiliates manage more than $50 billion of property and securities in North America, Europe and Asia. In addition to the AEW Partners fund series, the firm’s investment vehicles also include the AEW Value Investors series; AEW Senior Housing Partners, a closed-ended value-added fund series; and AEW Core Property Trust, an open-ended core fund.