Landmark targets $3.5bn for real estate secondaries

Landmark Real Estate Partners IX would overtake its 2018-vintage predecessor as the largest secondaries fund raised in the asset class.

Landmark Partners is aiming to knock itself off the top spot in largest real estate secondaries funds.

The Ares Management-owned firm is targeting $3.5 billion for Real Estate Partners IX, according to documents prepared by the Minnesota State Board of Investment, which committed $100 million.

The fund will aim to benefit from the increase in manager-led dealflow. Landmark has invested $2 billion in “partnership recapitalizations” in the real estate sector over the past five years, the documents notes.

Predecessor Real Estate Partners VIII attracted $3.3 billion against a target of $2 billion by final close in 2018, according to PERE sister title Secondaries Investor data. Significant investors by size included Ohio Public Employees Retirement System, which committed $200 million, and Minnesota SBI and New York State Teachers’ Retirement System, which committed $150 million.

The next-largest real estate secondaries funds are Partners Group Real Estate Secondary 2017, which attracted $2.9 billion, and Goldman Sachs Asset Management’s Vintage Real Estate Partners II, which attracted $2.75 billion.

Ares completed its $1.08 billion acquisition of Landmark in June, having agreed to buy the private equity and real estate secondaries firm in March.

Real estate has been Landmark’s strongest-performing business, generating a 25-percent-plus net internal rate of return since inception as of September, according to an investor presentation. This compares with 15 percent-plus for private equity and 10 percent-plus for infrastructure.

Fund VIII returned a net IRR of 13.9 percent and a net multiple of 1.2x as of the end of December, according to the presentation from Minnesota SBI.

Roman Braslavsky, head of Pantheon’s new real estate business, put real estate  secondaries transaction volumes for 2020 at between $8 billion and $8.5 billion.

Landmark did not return a request for comment.