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Coventry targets $400m for retail fund

The New York-based private equity real estate firm is targeting distress in the US retail sector with its third fund.

Coventry Real Estate Advisors is raising its third retail vehicle targeting $400 million (€271.6 million), according to people familiar with the matter.

New York-based Coventry, which was founded in 1998 by former Morgan Stanley Real Estate professional Peter Henkel, closed its predecessor fund, Coventry Real Estate Fund II on $330 million in 2004, around $80 million more than its initial target.

Sources told PERE, Coventry Real Estate Fund III, which the firm is already starting to invest, will adopt the same strategy of acquiring retail properties for redevelopment, ground-up development with joint venture partners and acquiring stores from retailers. The current economic downturn was boosting opportunities for investors in the retail sector, people familiar with the matter said, particularly as retailers looked to capitalize on their real estate assets.

A spokesman for Coventry declined to comment, but the firm’s website said one of its most recent transactions included the acquisition of Valley Fair Mall in January this year for $117.4 million. The firm said the regional mall in Salt Lake City, Utah, would be redeveloped and repositioned in a bid to decrease the current 950,000 square feet of interior shop space, increase density, change the existing tenant mix and add freestanding buildings to create a “town-center” effect.

Investors in Fund III are believed to primarily be US pension funds, endowments and foundations, although there are some international investors.

In March, the private equity real estate firm appointed former Deutsche Bank global head of real estate investment banking Devin Murphy to its team as managing partner. In a statement at the time, Devin said: “This is an exciting opportunity for me to help further [Coventry’s] real estate investment practice.”