Federal Capital holds first close on Fund III

 The Chevy Chase, Maryland-based real estate investment firm has raised nearly half of its $550 million target after launching last quarter.

Federal Capital Partners has completed its first round of fundraising for its third real estate fund, FCP Realty Fund III, amassing $216.15 million in equity from investors last month, according to a filing with the US Securities and Exchange Commission. PERE understands that The Chevy Chase, Maryland-based firm has since collected approximately an additional 10 percent in capital for the fund, which has a $550 million target. Federal Capital declined to comment.

The firm, which was founded by former Carlyle executives Esko Korhonen and Lacy Rice, is said to have launched Fund III during the fourth quarter as a follow-up to its second fund, which raised $592 million in 2012 and now is nearly fully invested. Federal Capital, which has received backing from investors such as the New York State Teachers’ Retirement System for its previous funds, is said to be aiming for a final close for Fund III by the third quarter.

Fund III would have a similar strategy to that of its predecessor funds, which have targeted joint venture equity, mezzanine debt, and preferred equity investments in the multifamily, office, retail and industrial sectors throughout the Mid-Atlantic region. However, the firm is expected to expand its investment footprint to include some new East Coast real estate markets. Federal Capital is said to have lined up two to four investments for the new fund.

One major transaction that the firm executed last year on behalf of Fund II was the recapitalization of a six-property multifamily portfolio in the Washington, DC metropolitan area.  Federal Capital Partners acquired a majority stake in the portfolio from the ROSS Companies in the recapitalization, which valued the portfolio in excess of $240 million. The deal was the largest apartment portfolio transaction in the Washington, DC area in 2014.