Covenant Capital Group, a Nashville, Tennessee-based private equity real estate firm, has closed its eighth value-add multifamily fund, the firm said Tuesday.
The firm rounded up $260 million for Covenant Apartment Fund VIII and closed the vehicle December 30. It launched the fund in May 2014 and held a first close last February. Similar to Covenant’s strategy for the rest of the fund series, the firm is investing in class B apartments for renovations and rebranding throughout the US’ Southeastern and Mid-Atlantic regions.
Covenant Apartment Fund VIII has a net internal rate of return target of 16 to 18 percent, Govan White, the firm’s co-founder, told PERE. Investors in the vehicle are 70 percent institutional groups and 30 percent high net worth individuals, White said. For the eighth fund, 76 percent of the investors had committed to previous vehicles in the series.
The firm’s predecessor fund, Covenant Apartment Fund VII, closed in January 2013 with $236 million in commitments.
The firm has deployed capital from the latest fund to nine investments as of December 30, including Nashville’s Metro Manor Apartments. The firm purchased the 170-unit property in June for $15.8 million with plans to renovate the apartments’ interiors and rooftop pool, and add a fitness center.
Covenant was founded in 2001 by White and Rick Scarola. During 2015, the firm sold 27 properties and returned over $265 million of capital to its limited partners, White said.