Carmel closes Fund V on $1.025bn

After nine months on the fundraising trail, the San Francisco-based multifamily specialist has hit the hard cap for its latest value-added vehicle.

Carmel Partners has held a final close on its fifth value-added multifamily offering, less than nine months after hitting the fundraising trail. The oversubscribed Carmel Partners Investment Fund V hit its hard cap at $1.025 billion, bringing in significantly more than its original $850 million target.

Carmel launched Fund V in October and had reached the vehicle’s equity target by the end of the first quarter, according to David “Mac” McWhorter, Carmel’s managing partner of investor relations. Many investors in Carmel’s previous funds signed on to Fund V, along with several new limited partners that committed approximately $200 million of equity. The capital raised represents more than 50 commitments from US-based investors, including endowments and foundations, family offices and corporate pension plans.

“We have a history of having oversubscribed funds and reaching our capital raise target quickly, which speaks to our team’s ability to consistently deliver strong investment performance,” McWhorter told PERE. 

Fund V’s strategy is consistent with Carmel’s previous fund, Carmel Partners Investment Fund IV, which also was oversubscribed and brought in $820 million by its October 2012 close. Carmel will seek net returns of 13 percent to 15 percent by investing in multifamily development, renovation and debt opportunities in supply-constrained, high barrier-to-entry markets in the US, such as the San Francisco Bay area, Southern California, Honolulu, Seattle, Denver, Washington DC and New York.

“In the current market cycle, we are continuing to see more development opportunities where we believe our vertical integration enables us to mitigate the risks in execution and construction,” said Carmel founder and chief executive Ron Zeff in a statement. “Therefore, similar to Fund IV, we expect Fund V to have a high percentage of investments in ground-up development.”

Carmel has begun deploying Fund V capital, recently acquiring a Manhattan property for a development project for $170 million. Located on Fulton Street, the redevelopment will combine three sites and air rights to build a 48-story residential tower with ground floor retail, according to data provider Real Capital Analytics. The firm expects to invest the capital from Fund V over the next two to three years.