Beacon closes Fund VI on $2.5bn

The Boston-based firm has held a final close on its latest vehicle, which was originally targeting $6bn.

Beacon Capital Partners has closed its sixth real estate fund on roughly $2.5 billion – less than half its original target of $6 billion.

The Boston-based firm is believed to have held a final close on the Beacon Capital Strategic Partners VI last week, garnering commitments from more than 100 investors.

Around one-third of the investors come from outside the US, people familiar with the matter told PERE, a substantial increase in the make-up of non-US limited partners compared to previous Beacon funds.

US institutional investors largely retreated from making new commitments to private equity real estate vehicles in the wake of the credit crisis, with proprietary PERE data showing just $30.4 billion of capital raised in closed-ended, commingled value-added and opportunistic real estate funds in 2009 compared to $85.2 billion in 2007.

Beacon has not made an investment from Fund VI to date, the sources said, leaving the firm with a sizable amount of dry powder with which to invest in office properties in major cities globally.

According to a 2008 presentation on the website of the Pennsylvannia Public School Employees' Retirement System (PSERS), Beacon's Fund VI has the right to invest up to 50 percent of its capital outside the US, mostly in Western European cities.

PSERS, which recommended a commitment of up to $200 million, with an additional $200 million for co-investment in August 2008, has previously invested in Beacon’s $4.04 billion Fund V, which closed in August 2007.

The PSERS presentation said Beacon’s first three funds realised IRRs of 15 percent, 47.4 percent and 49.1 percent respectively as of the end of March 2008, with equity multiples for Fund I, II and III of 1.2x, 2.6x and 2.3x respectively.