LEM Capital has held an interim close on its latest real estate debt fund. Documents from the US Securities and Exchange Commission have revealed that the Philadelphia-based firm has raised $127.99 million in equity commitments for LEM Real Estate High-Yield Debt and Preferred Equity Fund III, which is targeting a total of $300 million from investors, with a hard cap of $500 million. At press time, representatives from LEM did not return calls seeking comment.
According to the Pennsylvania Public School Employees’ Retirement System, which contributed $75 million to Fund III late last year, LEM will purchase and originate structured real estate finance investments, which primarily consist of preferred equity, mezzanine loans and first mortgages. The value-added commingled vehicle also will consider B notes, joint venture equity and entity-level investments in real estate operating companies.
Individual investments on behalf of Fund III generally are expected to range between $5 million and $20 million in size, with an average investment size of $8 million. LEM Capital anticipates completing 12 to 24 deals per year, depending on the size of the fund.
Fund III will invest preferred equity mostly in multifamily assets, but it also may invest in office, retail, industrial and hotel properties. The investments primarily will be made on the East and West coasts, the Southeast, metropolitan Chicago and in select markets in Texas.