Gerding Edlen has closed its latest fund on $416 million, PERE has learned. The Portland, Oregon-based firm had a $350 million target for Gerding Edlen Green Cities III.
Investors in the latest vehicle, largely domestic pension plans, include Connecticut Retirement Plans and Trust Funds, which earmarked $50 million, and the City of Memphis Retirement System and Fresno County Employees Retirement System, which each allocated $20 million, according to PERE data.
With capital from the value-added vehicle, the firm is investing in US mixed-use, multifamily and office properties. Across property types, the firm focuses on assets demonstrating environmental and sustainability qualities through the use of water. These might include energy conservation measures, recycled building materials and alternative energy sources, such as wind turbines, among other measures.
Gerding Edlen closed its first commingled fund in January 2012 on $138 million and Fund II in the second quarter of 2014 on $234 million, PERE previously reported. As with the third fund, the fund series has been focused on both urban multifamily and office investments in gateway cities, though because multifamily was more attractive at the time, Fund I was invested solely in the property type.
“We are deeply grateful for the strong support of our investors who recognize our commitment to meeting performance metrics that go beyond just economic returns and can make a real difference in the lives of our tenants, communities and the planet,” said Molly Bordonaro, the firm’s co-managing partner.
The firm is targeting a 14 percent net internal rate of return for Fund III, with a 1.5x equity multiple, according to meeting materials from the State Universities Retirement System of Illinois. Fund II generated an 18.9 percent net IRR as of June 30, according to meeting materials from Connecticut Retirement Plans and Trust Funds, which invested in Funds II and III.
Fund III is 64 percent invested in eight assets, the firm said. Gerding Edlen’s most recent publicly-available transaction was the December purchase of Neponset Lending, a 280-unit apartment building in Quincy, Massachusetts, from CBRE, according to data provider Real Capital Analytics.
New development will comprise about half of the fund, and the firm expects to deploy between $35 million to 50 million per transaction with 55 to 65 percent leverage, according to SURS’ meeting materials.
“The closing of Fund III marks an important milestone in the firm’s path towards meeting the evolving needs and preferences of today’s tenant,” Kelly Saito, the firm’s co-managing partner, said. “In this environment, success in our business requires a truly ‘hands-on’ strategy, and we are grateful that the investor community recognizes our approach as evidenced by the Fund III’s oversubscription.”
Gerding Edlen was founded in 1996 by Mark Edlen and Bob Gerding, who died in 2009. In January, Bordonaro and Saito took over as co-managing partners, overseeing all of the firm’s activities, as part of succession planning, according to a statement at the time.