Greystar Real Estate Partners is coming to market with its next US value-add real estate fund, Greystar Equity Partners X, PERE has learned.
The multifamily-focused fund has a target size in the $1.5 billion range, slightly larger than its predecessor fund, which hit its $1.25 billion hard-cap during its final close in January 2017, according to sources familiar with the matter. A hard-cap for Fund X has not yet been determined, sources said.
Greystar declined to comment, but PERE understands that the Charleston, South Carolina-based firm is having preliminary discussions with existing investors and is expected to hold a first close for Fund X later this year when Fund IX, currently about 75 percent invested, is 90 percent deployed.
Limited partners that previously invested in Greystar funds include Ohio Police & Fire Pension Fund, Kansas Public Employees Retirement System, and South Carolina Retirement System Investment Commission.
Greystar, led by chairman and chief executive Bob Faith, focuses on acquiring Class A and B apartments at below-market prices in select US markets where current rents are significantly lower than market rents, and then improves the properties to realize higher rents and a higher price upon the sale of the assets. Similar to its predecessor funds in the value-add series, the firm is target mid-teens gross returns for Fund X.
Greystar previously raised $800 million for Fund VIII in 2013 and $600 million for Fund VII in 2011. RSIC’s investment in Fund VII generated a net return of 20.04 percent with a net multiple of 1.67x at the time of final distribution date on September 29, according to a spokeswoman. That fund targeted similar returns to that of Fund IX, which has a gross return target of 15-17 percent. However, because Fund IX is a 2016 vintage fund, “current returns are not meaningful as it is still in its investment period and many investments are being held at cost,” the spokeswoman wrote in an email to PERE. RSIC did not invest in Fund VIII.
Greystar also continued to raise capital for its US open-ended core-plus fund, Greystar Growth and Income Fund, which the firm launched in January 2017 and raised $2.3 billion in its initial close in July from Dutch pension fund managers APG and PGGM, Singaporean sovereign wealth fund GIC, and Ivanhoé Cambridge, the real estate subsidiary of Caisse de dépôt et placement du Québec. The vehicle is understood to have since attracted additional capital, including $400 million from the National Pension Service of Korea, as well as $211 million from Townsend Group’s multimanager platform.