The Carroll Organization has closed its fourth fund on just over $40 million and plans to raise $400 million in joint venture equity, giving it buying power of more than $1 billion to invest in multifamily.
The Atlanta-based private real estate firm launched Carroll Multifamily Real Estate Fund IV, a value-added vehicle, in December 2015 with a $50 million target, Carroll investor relations head Jeb Boccaccio told PERE. The firm plans to raise an additional $360 million in joint venture equity from institutional partners to invest alongside the fund.
PERE understands that the firm is also currently marketing its fifth fund with a $100 million target after receiving increased interest from sovereign wealth funds and other institutional investors.
Founded in 2004, the firm started raising funds in 2011. Through the fund series, Carroll is the operating partner in joint venture acquisitions, committing 5 percent to 10 percent of the required equity for purchases.
Carroll launched its third fund in February 2014 and closed the vehicle in March 2015 on $21.8 million, with 33 investments total. That fund had a 12.8 percent net internal rate of return as of September 30. Carroll's previous two funds returned 31.6 percent net and 20.7 percent net, respectively.
“We like to raise funds every year from investors because we feel it allows us the ability to adjust our strategy, if necessary,” Pat Carroll, the firm’s founder, told PERE. “However, since 2011 we really have not changed our strategy – we still invest in value.”
The investor base for Fund IV comprises high-net-worth individuals, family offices, endowments, sovereign wealth funds and other institutional investors, Boccaccio said. Carroll plans to deploy capital from the vehicle in $40 million to $80 million transactions in the southwest, southeast and mid-Atlantic regions of the US.
“Specifically, properties that are underperforming, underutilized and produce strong free cash flow, while utilizing conservative leverage,” Carroll said. “At the end of the day, we’re looking for stand-up doubles, not home runs. We can’t underscore this enough. We feel that our strategy protects principal, performs well in rising-rate, inflationary environments and allows for the occasional home run.”
The firm now manages about 20,000 apartment units, Boccaccio said. In October, Carroll acquired Estates at Vinings Station, a 315-unit multifamily property in Atlanta, with its fourth fund, according to a statement at the time.
Carroll bought the 10-building property in a joint venture with Los Angeles-based private equity real estate firm PCCP for $53.8 million from Invesco Real Estate, the Atlanta-based investment manager, according to data provider Real Capital Analytics.
Carroll oversees about $2.6 billion in assets.