Cerberus closes latest $1bn-plus RE fund – Exclusive

The New York-based private investment firm blew past its target to raise its largest property vehicle yet.

Cerberus Capital Management has closed on its largest-ever global opportunistic real estate fund, the $1.8 billion Cerberus Institutional Real Estate Partners IV, (CIREP IV).

The firm is said to have formally launched CIREP IV during the second quarter of 2015, though it did not register the fund with the US Securities and Exchange Commission until October of that year. Cerberus held a first closing of slightly less than $600 million for the fund in October 2015, according to an SEC filing. The fund is understood to have had a $1.5 billion target and $2 billion hard-cap.

The fund attracted commitments from more than 60 investors, including sovereign wealth funds, public pension plans, corporate plans, insurance companies, endowments, foundations and high-net-worth individuals.

Limited partners in CIREP IV include the Florida State Board of Administration, which agreed to invest $200 million during the fourth quarter of 2015; San Francisco Employees’ Retirement System (SFERS), which earmarked up to $100 million to the vehicle in September 2015 – its first commitment to Cerberus’ real estate platform – the Oklahoma Police Pension & Retirement System (OPPRS), which designated $15 million in March; and the Texas Permanent School Fund, which pledged up to $75 million in July, according to documents from those institutions.

On behalf of CIREP IV, Cerberus will primarily target highly complex or distressed real estate equity and debt transactions where competition is limited. The firm will seek to invest roughly half of the fund’s capital in the US and the remainder in western Europe, according to minutes from SFERS’ board meeting in September.

For the third year in a row, Cerberus was the most active buyer of real estate loans and REOs in Europe in 2016, according to a Q4 2016 report from New York-based investment banking advisory firm Evercore. Cerberus acquired €9.4 billion of real estate loans across eight transactions in the region, and accounted for 19 percent of total European loan transaction volume last year, the report said.

“We are delighted to announce the successful close of CIREP IV,” said Ronald Kravit (pictured, right), senior managing director at Cerberus. “The firm has been successfully investing in distressed and opportunistic real estate assets for over 20 years. We look forward to deploying CIREP IV and generating attractive returns to our investors.”

Cerberus, which launched its real estate business in 1994, previously raised $903 million for CIREP I in 2004, $910 million for CIREP II in 2008 and $1.4 billion for CIREP III in 2012, according to PERE Research and SFERS documents. CIREP III was generating an investment multiple of 1.27x as of March 31, according to OPPRS documents.

Hodes Weill Securities acted as global placement agent for CIREP IV, while Axius Partners represented the fund in Australia.

Cerberus has more than $30 billion under management across three platforms: global credit opportunities. which includes non-performing loans, corporate credit and distressed debt, mortgage securities and assets, and direct lending; private equity; and real estate.