Centennial Holding has launched its fourth discretionary real estate fund, Centennial Real Estate Fund (CREF) IV. According to market sources, the Atlanta-based private real estate investment firm is seeking up to $300 million in equity commitments from institutional investors such as pension plans, endowments and family offices and anticipates holding a first close by mid-year.
CREF IV will apply the same investment approach as its previous funds, although Centennial is expected to place more emphasis on value-added opportunities that can be improved through cosmetic enhancements. Overall, however, Centennial will continue to target low-risk, Class A multifamily assets – typically contemporary, upscale garden and mid-rise apartment communities – with an average of 250 to 300 units.
In terms of markets, Centennial will target high-growth areas of the Southeast and Mid-Atlantic, from the Florida shores to Washington DC, as well as stretches of central Texas, including Austin. Acquisitions typically are located in fringe markets – defined as not urban, but not suburban either – and growth areas near employment, entertainment and recreation destinations.
Individual investments can range from $10 million to $50 million. Centennial, which typically holds its assets for a four- to seven-year period, is said to be targeting net IRRs in the mid-teens on behalf of CREF IV.
Centennial’s previous fundraising effort, CREF III, closed on $107 million in commitments in October 2012. The firm is said to still have enough dry powder from that fund – about $25 million – to last it through the spring.