Carmel closes fourth value-added fund

After holding a $600 million closing in December, the San Francisco-based multifamily specialist has seen its Carmel Partners Investment Fund IV reach its hard cap of $820 million.

Carmel Partners has closed its fourth real estate investment fund targeting underperforming US multifamily properties. According to the San Francisco-based real estate investment firm, fundraising for Carmel Partners Investment Fund IV has reached its hard cap of $820 million. 

In a statement, Ron Zeff, Carmel’s founder and chief executive officer, said the commingled vehicle received commitments from “26 returning investors and 17 new investors.” As with the firm’s prior three funds, investors that committed to Fund IV largely consisted of university endowments and foundations.

With a target of $700 million, Fund IV was scheduled to close at the end of 2011. However, sources told PERE that not all investors we able to approve their commitments by year-end, so Carmel held an initial close on $600 million in December. The firm then held additional closings as investors received approval and reached its $700 million target in early 2012. Based on a strong deal pipeline, Carmel decided to engage in discussions with additional investors to reach its $820 million hard cap.

Through Fund IV, Carmel will continue to execute its value-added investing strategy of acquiring and repositioning underperforming multifamily assets in the US. Carmel also invests in new development and high-yielding multifamily debt opportunities with compelling risk-adjusted returns. This strategy is consistent with the multifamily specialist’s prior funds.

Since initiating investment activity in March 2012, Fund IV has committed approximately 30 percent, or $250 million, of the fund’s equity. Fund IV is said to be targeting returns in the 13 percent to 15 percent range.

Carmel closed on its first fund, Carmel Partners Investment Fund, in November 2003 with $215 million in equity and followed with its $400 million second fund, which closed in June 2005. More than 95 percent of the original fund’s investors committed to Fund II, in addition to 11 new investors, according to the firm’s website. Carmel’s third fund, which closed in September 2007, raised a total of $700 million in equity. Fund III concluded its investment activity in April 2012 with 36 transactions.

Including Fund IV, Carmel has raised approximately $2.5 billion of institutional equity. Since its inception in 1992, the firm’s investments consist of 121 assets comprising 26,275 apartment units.