Greystar Real Estate Partners has raised its largest-ever real estate fund, Greystar Equity Partners IX, and is expected to hold a final close at its $1.25 billion hard cap by the end of the month, according to market sources.
The Charleston, South Carolina-based multifamily real estate firm collected a total of $1.21 billion for the value-add fund as of December 31, according to a Tuesday filing with the Securities and Exchange Commission yesterday.
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.
Greystar launched Fund IX with a $1 billion target, PERE reported in November 2015. The firm held a first close of $200 million in December 2015, according to an SEC filing.
Limited partners in the fund include Ohio Police & Fire Pension Fund, which committed up to $50 million in April; Kansas Public Employees Retirement System, which pledged up to $40 million in May; and South Carolina Retirement System Investment Commission (RSIC), which agreed to invest $150 million in September. Greystar made a GP commitment of $25 million to the fund, according to RSIC documents.
The firm declined to comment, but PERE understands that approximately 90 percent of the fund’s limited partners were existing Greystar investors. About two-thirds of the capital raised came from non-US investors, while one-third was from domestic institutions.
Greystar previously raised $800 million for Fund VIII in 2013 and $600 million for Fund VII in 2011. Fund VIII was generating a net return of 15.2 percent and multiple of 1.2x, while Fund VII had a net return of 20.1 percent and multiple of 1.8x as of March 31, the RSIC documents said. The firm is targeting 30 to 40 apartment acquisitions and a gross return of 15 percent to 17 percent for Fund IX, according to the pension plan.
Investments on behalf of Fund IX included two Los Angeles-area acquisitions for a total of $178 million in July: Gardens at Wilshire Center, a 195-unit multifamily community located at 3675 Wilshire Boulevard in the city’s Koreatown neighborhood, and Villas at Rancho Palos Verdes, a 215-unit multifamily community located at 6600 Beachview Drive in Ranchos Palos Verdes.
HFF Securities acted as placement agent for Fund IX.