New York-based JEN Partners has closed its latest opportunistic fund targeting residential land, PERE has learned.
The firm declined to comment, but PERE understands that JEN Partners launched JEN V in October 2015 and closed the vehicle earlier this month on $280 million, above the firm’s original $250 million target.
One investor in the fund is Massachusetts Pension Reserves Investment Management Board (MassPRIM), which allocated $50 million in June as part of its emerging manager program, according to board meeting documents.
The firm launched JEN IV, its first fund to include institutional capital, in February 2013 and closed the vehicle in January 2014 on $180 million, sources with knowledge of the fundraising process told PERE. Between the fourth and fifth fund closes, the firm also created a $144 million separate account with a US state pension plan.
With capital from the fund series and the separate account, the firm provides short-term financing for US homebuilders and purchases land for repositioning in the Sunbelt region of the US, according to MassPRIM.
Through lot banking deals, a type of off-balance sheet financing, JEN Partners acquires land to convert from ‘shovel-ready’ to finished lots with infrastructure such as sewer, water and gas lines in place, which a homebuilder can then purchase on a fixed schedule. Unlevered, these deals can yield a mid-teens unlevered internal rate of return, but with 50 percent leverage, the firm predicts a 20 percent gross IRR and a 1.4x to 1.6x gross multiple.
JEN Partners also plans to deploy capital through land repositioning, which targets mismanaged lots that the firm then redevelops and sells over six to 12 months, with an expected gross IRR of over 25 percent.
The firm had acquired eight assets for $75 million in equity on behalf of JEN V as of June, according to MassPRIM. The firm’s most recent publicly-disclosed acquisition of a development site was the November purchase of an 8.8-acre property in Imperial Beach, California, according to data provider Real Capital Analytics. JEN Partners paid $9.3 million for the site, formerly an RV park.
The firm was founded in 2005 by Reuben Leibowitz, who founded and led the real estate group at Warburg Pincus. His son, Ethan, joined JEN Partners in 2007 after working at the Boston Consulting Group. Ethan plans to eventually take over for his father, according to MassPRIM documents.
New York-based advisory firm Shelter Rock acted as placement agent on the fund.