Kayne Anderson Real Estate Advisors, the private equity real estate arm of Kayne Anderson Capital Advisors, has closed its second fund well above its initial target, according to the Armonk, New York-based student housing specialist.
Kayne Anderson Real Estate Partners (KAREP) II held a final closing on $575 million in equity commitments, exceeding its initial target of $350 million. KAREP II, an opportunistic vehicle targeting student housing opportunities in the US, was raised over the course of about one year, having held a first close on 9 December 2010. Investors include high-net-worth individuals, family offices, foundations, endowments and institutions.
“We initially had a hard cap of $500 million, but we found ourselves dramatically oversubscribed. We hadn't anticipated that level of demand, so we raised our hard cap to $575 million,” said Al Rabil, managing partner of Kayne Anderson Real Estate Advisors.
Rabil added that the fund also grew because the firm “had a very solid roster of closed deals. As we proceeded through 2011 and investors saw that we had close to $150 million of equity invested at attractive deal prices, it became less of a blind pool”.
KAREP II is a continuation of KAREP I, though the first fund was a combination of opportunistic and value-added acquisitions, whereas KAREP II is “far more in the opportunistic side,” according to Rabil. The fund is targeting net IRRs of 16 percent to 20 percent.
To date, the fund has made nine portfolio investments, which account for roughly $130 million of equity. KAREP II's investments include The Lodges of East Lansing at Michigan State, The Cottages of College Station at Texas A&M, 5 Twenty Four Angliana at University of Kentucky, The Cottages of Baton Rouge at Louisiana State University, The Cottages of Durham at University of New Hampshire, The Lofts of Kennesaw at Kennesaw State and West 27th Place at University of Southern California. The firm also recently purchased 18 self-storage properties in Indiana and Ohio on behalf of KAREP II.