Angelo Gordon has closed its tenth and largest US real estate fund on $2.75 billion, surpassing its target by $250 million, PERE has learned.
The New York-based manager will use AG Realty Value Fund X to invest in distressed and underperforming properties.
While most of its acquisitions will be in the US, up to 20 percent of the fund’s capital can be deployed in Europe and Asia.
Unlike previous funds in this series, AG Realty Value Fund X has a value-add strategy, targeting a 12-13 percent net internal rate of return – 16-17 percent gross – according to US pension Pennsylvania Public School Employees’ Retirement System meeting document. PSERS committed $150 million to the vehicle.
Predecessor Fund IX had an opportunistic strategy targeting a 20 percent gross return, according to meeting materials from the Contra Costa County Employees’ Retirement Association. That vehicle has delivered an 11.4 percent net IRR and a multiple of 1.22x, according to first quarter performance results tracked by the Minnesota State Board of Investment, which committed $100 million to it in November 2014. MSBI has also committed $150 million Fund X.
Angelo Gordon secured commitments from a mix of US and foreign investors with most being renewals. The firm did not use a placement agent and it had to turn away capital because the vehicle was oversubscribed.
Other investors include New York State Teachers Retirement System, which committed $100 million and the Employees’ Retirement System of the State of Hawaii, which committed $50 million, according to PERE data. The Public Employees’ Retirement System of Mississippi, Texas County and District Retirement System and Texas Permanent School Fund earmarked $75 million each. Several other US pensions signed smaller checks.
Angelo Gordon is expected to purchase a wide variety of property types with Fund X, including office, multifamily, retail and hotel, as well as a variety of niche assets, such as self-storage, senior housing, student housing and for-sale housing. It will also invest in risk strategies ranging from core-plus to opportunistic.
The fund will be run by the same team that has helmed the last four US real estate vehicles for the $33 billion investment manager. Adam Schwartz, co-chief investment officer and head of real estate and Reid Liffmann, co-portfolio manager of US real estate, will take the lead, while Steve White, head of western US real estate and deputy portfolio manager, and Matt Jackson, deputy portfolio manager, will assist.
Angelo Gordon is also raising capital for AG Asia Realty Fund IV, an opportunistic Asia-Pacific vehicle, and AG Net Lease Fund IV, a value-add fund launched in 2019.