Angelo Gordon is taking a new approach to US real estate investment, replacing its two-tiered approach with a single, more flexible fund – and investors have approved the move with oversubscription.

The New York-based firm is targeting a value-add risk-return profile for AG Realty Value Fund X, which reached its final close this week. Historically, the manager has sought opportunistic properties from its AG Realty series and more stable assets with its AG Core-Plus vehicles. Now, it has eyes on a broader mandate, with more modest returns.

Rather than punish it for easing off the accelerator, investors rewarded Angelo Gordon by committing $2.75 billion to Fund X. Oversubscribed by $250 million, it is the firm’s largest real estate fundraise to date.

In total, the firm raised more capital for Fund X than it did for its previous opportunistic and core-plus funds combined, both of which closed on roughly $1.3 billion in 2015. That should serve as a signal to other managers that reliable results are a fine substitute for inflated expectations.

Aside from the adjusted classification, there is little difference between this fund and its predecessors. Acquisitions run the gamut of property types and profiles, and like the previous two series, the AG Realty Value Fund X will be focused on the US with a modest allowance for European and Asian investment. The $33 billion asset manager has the same team running the fund, too.

All that sets this vehicle apart is its projected rate of return. Angelo Gordon forecasted gross IRRs of 20 percent, or better, for its prior three US opportunistic funds and 14-15 percent for its core-plus offerings – though some have cleared that hurdle easily. For the value-add strategy, the firm has set the bar at 16-17 percent gross IRR.

The root of that change has to lie in the broader market. Nearly 11 years into an economic expansion, opportunistic properties have become scarce in the US and core strategies have grown less appealing as values peak and returns taper. It stands to reason Angelo Gordon would adjust its yield expectations accordingly. As Adam Schwartz, co-chief investment officer and head of real estate, tells PERE, the shift allows the firm “to target the most attractive opportunities as markets fluctuate over the course of the fund’s investment period.” Also, with more institutions adopting simplified real estate allocations – opting only for core and non-core – there is little incentive for firms to shoehorn their funds into opportunistic, value-add or core-plus silos.

Investors have used their checkbooks to give this shift a resounding vote of confidence. The Minnesota State Board of Investments and the Pennsylvania Public School Employees’ Retirement System, which had previously backed Angelo Gordon’s opportunistic and core-plus strategies, respectively, increased their commitments from $100 million to $150 million for Fund X.

This fundraise puts the firm in rarified air. It joins the top five private real estate fund managers in this year’s PERE 100 ranking – Blackstone, Brookfield, GLP, Starwood, and Carlyle – in holding a record-setting close in the past year. For its part, Angelo Gordon climbed into the top ten of the annual list, which comes out next week.

For the tenth vehicle in a long-running and successful series, Angelo Gordon could have bet on its ability to achieve outsized returns in a dubious market. Instead, it put faith in its track record and investor loyalty, a wager that has evidently paid off and handsomely.

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The Macquarie PERE Global Investor 50 is now open for submissions!

The Macquarie GI50 is PERE’s annual list of the world’s leading investors in private real estate. The 2019 ranking is based on the amount allocated to private real estate as of March 31 2019.

We are seeking your help to ensure the ranking is as accurate as possible: to be considered for the ranking, please email Jesse Koppi, senior research associate, at

Deadline for submissions: June 15, 2019