Cypress Equities nears $300m for debut fund

After holding a first close in May, the first-time fund manager is approaching its equity target and is expected to hit its hard cap by January.

Cypress Equities Real Estate Investment Management has raised more than $250 million and now is close to reaching its $300 million equity target for its debut institutional offering, Cypress Acquisition Partners Retail Fund, after launching the vehicle late last year, according to two people familiar with the fund. PERE understands that the firm is anticipated to reach its hard cap of $400 million by January. Cypress declined to comment.

The Dallas-based investment firm gathered $195.56 million during the fund’s first close in May, according to a filing with the US Securities and Exchange Commission. Early investors included New Mexico State Investment Council (SIC), which agreed to invest $50 million in April. Credit Suisse is acting as placement agent for the fund, the filing noted.

According to documents from the New Mexico SIC, all limited partners that are clients of consulting firm The Townsend Group will receive fee breaks of 1.4 percent for commitments above $100 million. Additionally, if the total amount of capital raised from Townsend clients reaches $100 million, any such clients in the fund’s first close will pay a 1.35 percent management fee.

The vehicle, which is targeting a 17 percent gross return, will focus on the acquisition of multi-tenant retail properties including power centers, lifestyle centers and grocery- and drugstore-anchored strip centers in the US. The fund’s value-added approach will be focused on repositioning existing space to better suit retail tenants’ changing demands, as well as re-tenanting properties. Cypress made its first investment on behalf of the fund in June, with the acquisition of the Lloyd Center, a 1.48 million-square-foot shopping center in Portland, Oregon, from Glimcher Realty Trust and The Blackstone Group.

An affiliate of SRS Real Estate Partners, Cypress Equities was established in 1995, initially as a retail development platform with a build-to-suit strategy. In 2003, the firm formed a $30 million acquisition fund with equity from high-net-worth individuals, as well as a $150 million development joint venture with The Carlyle Group. Since then, Cypress also has served as the retail operating partner for a number of other major sponsors, including JPMorgan Asset Management, iStar Financial, Sarofim Realty Advisors, Apollo Global Real Estate and Kimco Realty.

Cypress Equities’ real estate investment management group comprises a nine-person fund management team led by Todd Minnis, senior managing director and chief investment officer, and Chris Maguire, senior managing director. Minnis joined SRS in 1992 and currently acts as head of its acquisitions team, while Maguire co-founded SRS with former Dallas Cowboys quarterback Roger Staubach in 1986 and serves as the firm’s chairman and chief executive.