Carmel to hold single $700m close

The San Francisco-based real estate firm is said to be oversubscribed for its fourth fund, which will focus on the acquisition and repositioning of multifamily properties.

Carmel Partners is on track to hold a large single close for its Carmel Partners Investment Fund IV next month, according to one institutional investor who wished to be unnamed. The discretionary, value-added fund, which is targeting $700 million in commitments and has a hard cap of $800 million.

Fund IV, which is said to be targeting returns in the 13 percent to 15 percent range, is expected to reach its fundraising target, partly because of Carmel’s reputation as “a marquee name” in the multifamily space and the strong performance of its previous funds, according to another investor familiar with the fundraising effort. The firm’s second fund, which held a final close of $400 million in commitments in June 2005, for example, was a top-performing fund for investors that vintage year, he said.

Carmel’s latest fund will follow a similar strategy to the firm’s previous investment funds, with a focus on the acquisition and repositioning of underperforming multifamily assets in the US. As with Carmel’s other three funds, investors that committed to Fund IV largely consisted of university endowments and foundations. In raising capital for its new fund, the firm is thought to have approached only its existing investors, according to a third investor PERE spoke with.

Yale University’s endowment had invested in Carmel’s first three funds and is also believed to have made a commitment to Fund IV, said the investor. The university declined to comment on its commitments.

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 company’s website. Carmel’s third fund, which closed in September 2007, raised a total of $700 million in equity. The firm declined to comment on its latest fundraise.

The firm’s investments to date comprise 41 properties with a total of 12,452 units in California, Seattle, Washington, D.C., Denver, Phoenix, Texas and Hawaii.