AEW raises $550m for Fund VII

The Boston-based real estate investment manager has hit the fund’s hard cap after more than two years in market.

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.