Calare to hold final close on latest fund

Calare Properties is on track to raise a total of $80 million for its latest real estate investment vehicle and a related separate account by the end of this month. Calare Real Estate Income Value Fund, which was launched in February 2011 with a capital target of $50 million to $100 million, is expected to close on $80 million in aggregate commitments, including $30 million through the fund and $50 million through a separate account that would invest solely in deals in which the fund is investing.

The new fund’s investment strategy will be similar to that of the Hudson, Massachusetts-based firm’s previous four funds, which were raised between 2004 and 2007. However, unlike the predecessor funds, whose limited partners primarily consisted of high-net-worth individuals, the latest fund marks the first time that Calare has attracted capital from fund of funds managers and endowments. For this reason, the size of the fund is significantly larger than the previous vehicles, which ranged between $5.9 million and $10.6 million in commitments.

The Calare Real Estate Income Value Fund will acquire distressed, underperforming and bank-owned industrial properties primarily in the Northeast region of the US, with the intention of creating value through new capital investment, management and repositioning. The vehicle generally will pursue deals in the range of $5 million to $30 million and target a gross levered internal rate of return of more than 20 percent and unlevered return of more than 12 percent.

“Industrial has become a top focus for some of these institutional investors,” said Bryan Blake, the firm’s director of business development. “It’s a hot asset type.” Calare, however, typically invests in industrial properties in suburban, non-central business district areas, in contrast to other managers in the sector, which typically go after assets close to cities.

“Investment activity has been pretty brisk,” added William Manley, the firm’s founder and chief executive. As of December, the firm had invested about half of the fund’s $25 million in committed capital and is expected to put the remaining capital to work this year. The fund’s largest deal to date was the April 2012 acquisition of a solar facility at 112 Barnum Road in Devens, Massachusetts, for $8.3 million through a joint venture with Hackman Capital Partners.