Managers

HQ targets $250m for next US fund – Exclusive

The German-American firm will be launching the new multifamily vehicle in the fall, just months after closing on its predecessor on $152m.

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HQ Capital Real Estate is aiming to raise $250 million for its next US multifamily fund, RECAP Opportunity Fund III, PERE has learned.

The firm, which targets a 12-14 percent net internal rate of return for the fund series, plans to start raising the vehicle in the fall.

HQ announced last week that it had closed the predecessor fund on $152 million. The Frankfurt, Germany and New York-based alternative investment manager had a $150 million target for RECAP Opportunity Fund II. The firm is investing in joint venture ground-up development and value-added buildings throughout the US, with eight investments closed to date. HQ plans to fully deploy the fund by the end of the year.

“We continue to see strong interest from investors for US multifamily real estate,” said Paul Doocy, the firm’s co-head of real estate. “Compelling demographics, steady job growth and relative affordability are the key drivers of this strategy.”

Last month, director Jeremy Katz was promoted to co-head of real estate, joining Doocy in the position, PERE previously reported.

HQ invests across risk/return profiles and has led over 60 separate account investments, with a 20.4 percent gross IRR on 175 realized investments, a spokeswoman said. The firm managed $5.2 billion in real estate as of March 31.

The firm was founded in 2015 through the merger of three investment managers: Auda, Real Estate Capital Partners and Equita. Real Estate Capital Partners closed RECAP Opportunity Fund in December 2014 on $92 million. HQ’s anchor investor is the family office of Harald Quandt, a German industrialist who died in 1967.

German investment in US real estate remained steady last quarter compared with the same period in 2016, according to data provider Real Capital Analytics. German investors bought $1.7 billion of real estate in Q2 2017, compared with $1.9 billion in Q2 2016.

The largest German investor in the US is Hamburg-based Union Investment, which has closed $2.7 billion of deals in the last 24 months, according to RCA. HQ ranked eleventh in the last two years, investing $86.5 million, though the firm ranks second among German buyers of US multifamily properties in the last two years, behind Cologne-based Jamestown.