Greenfield Partners has gathered its first round of capital for its seventh opportunity fund and tenth real estate fund overall, Greenfield Acquisition Partners (GAP) VII. The firm collected nearly $120 million in the initial close for the fund, which has a $750 million target, according to a filing with the US Securities and Exchange Commission late last week.
Similar to the previous vehicle in Greenfield’s opportunity funds series, GAP VI, the new fund will pursue value-added real estate opportunities in suburban office and industrial properties, with about 30 percent of its capital designated to investments in each property type. An additional 30 percent of the fund will be invested in “situational opportunities,” or properties in markets with strong or improving supply and demand fundamentals but weak capital interest, while the remaining 10 percent will be allocated to public university student housing developments. GAP VII primarily will invest in the US, as well as in select opportunities in Europe and Central and South America.
Greenfield is led by Eugene Gorab, who previously was a founding partner of Starwood Capital Group and head of its development and land groups. The firm is seeking a gross return of 15 percent and a gross equity multiple of 2x, and a net return of 13 percent and net multiple of 1.8x for GAP VII, according to documents from the Texas Municipal Retirement System (TMRS), which committed $75 million to the fund in September.
Investors who participated in the initial closing of GAP VII will pay a reduced management fee of 1.25 percent during the first year in the fund, while limited partners that closed within six months of the first close would pay a fee of 1.35 percent, TMRS documents noted. Other investors would be subject to a 1.5 percent fee on both committed capital during the investment period and invested capital thereafter.
Greenfield is targeting a more modest capital raise with GAP VII as compared to its predecessor vehicle, which had a $1 billion equity goal but ultimately raised about $450 million in its final close in April, according to TMRS documents. That vehicle attracted $68 million in the first close in April 2011 and $272.47 million in an interim closing in August 2012, according to SEC filings.
At the end of the second quarter, GAP VI was generating a total net return of 16.1 percent and an equity multiple of 1.1x, while GAP V yielded a total net return of 8.7 percent and an equity multiple of 1.27x, according to a real estate report from the San Joaquin County Employees’ Retirement Association. The California pension was a limited partner in those two funds, both of which had return targets of 15 percent.
One of Greenfield’s major recent investments, announced in November, was the acquisition of 6.6 million square feet of office, flex and industrial properties and 159 acres of land in Florida, Maryland, New Jersey, Pennsylvania and Minnesota from Liberty Property Trust for approximately $705 million. The sale of 49 properties of the 97-property portfolio closed in December, while the remainder of the transaction is slated to be completed late this month.