Colony raises $700m in first close – exclusive

Colony Capital has held a first close for its fourth real estate debt fund, Colony Distressed Credit & Special Situations Fund (CDCF) IV, PERE has learned. According to a filing with the US Securities and Exchange Commission, the Los Angeles-based firm had gathered $688.62 million as of December 3. However, Colony is understood to have now raised more than $700 million for the fund, just shy of a third of its $2.5 billion target.

The real estate manager was said to have begun marketing CDCF IV earlier this year. Limited partners to date have included the Teachers Retirement System of Louisiana, which committed $75 million in September and Kern County Employees’ Retirement Association, which earmarked $60 million last month. Colony declined to comment.

In June, PERE reported that Colony planned to co-invest up to $500 million in the new vehicle, which will its largest real estate debt offering to date and mark the first time that the firm will be raising a fund as a public company. In April, Colony merged with its publicly-traded mortgage real estate investment trust, Colony Financial, which was subsequently renamed Colony Capital.

Because the firm’s principals, which include founder Tom Barrack and chief executive officer Richard Saltzman, own 23 percent of the company’s shares, 23 percent of the GP co-investment, or up to $115 million, will come from those executives. The $700 million raised to date is said to include some GP co-investment capital, although the exact amount could not be determined at press time.

Similar to its predecessors in the fund series, CDCF IV will be focused on loan acquisitions, high-yield originations and special situations. However, compared with CDCF III, which collected a total of $1.2 billion in October 2014, the new fund has a larger allocation to Europe. CDCF IV will have a 60 percent allocation target to Europe, compared with 40 percent for CDCF III. PERE understands that Colony has not yet begun investing the fund’s capital.