Crow Holdings Capital has raised over $600 million for its first vehicle focused exclusively on high-net-worth individual and family office capital, PERE has learned.
The non-listed real estate investment trust, Crow Holdings Industrial Properties Trust, raised 100 percent of the capital from domestic investors via a network of registered investment advisers, broker dealers and an internal team of three people focused on family offices. The firm and its employees also contributed around 17 percent of the capital raised, chief executive officer Michael Levy told PERE.
Investors in the fund also have taken a stake in the underlying general partner, a separate entity that houses the vehicle, as opposed to Crow Holdings Capital itself. This means they will pay lower management fees on their fund commitments, Levy said. He noted that the timing and mode of the exit have not yet been determined but said either a private recapitalization or even a public listing of the portfolio were potential exit options.
“If this grows and it recaps privately or publicly, that GP will have value,’” Levy said. “I think that was part of the attraction.”
In investing the vehicle’s capital, the Dallas-based manager will be focused on assets in the five top industrial markets in the US: New Jersey, Pennsylvania, Dallas, Atlanta and Southern California. At least 75 percent of the portfolio is slated to be development assets, with the remainder allocated to tactical acquisitions. For its non-traded REIT, the firm expects to develop assets between 200,000 and 400,000 square feet and accommodating between two and four tenants, the industrial property type that Levy said is catering to the vast majority of tenants today.
“This will not be ‘big bomber’ focused, where everything’s going to be a million square foot distribution center and above, nor will this be all last mile,” Levy said.
CHC is no stranger to sector-specific fundraises, raising $295 million for its first dedicated retail fund, Crow Holdings Retail Fund, in 2014 and following that up in 2017 with a $417 million second retail fund, per PERE data. The firm also raised a self-storage fund in 2017, raising $233 million. This REIT eclipses even the $400 million raised from two institutions earlier this year in an attainable housing joint venture.
The manager, which has around $13 billion in assets under management, still is planning to continue to raise capital through its institutional fund series. CHC’s last diversified fund, Crow Holdings Realty Partners IX, raised $2.3 billion and is in the early stages of raising its tenth fund, per PERE data. The plan isn’t necessarily to scale this retail and family office channel in the same way, however.
Levy stressed CHC’s fundraising efforts with high-net-worth capital should not be compared with what Blackstone and Starwood are doing with their large, diversified non-listed REIT offerings.
“Some family offices, distinguished broker dealers and RIAs for wealthy families want to have a discussion around a specific sector fund or a specific group of properties,” Levy said.