Longfellow closes $500m innovation RE fund – Exclusive

The Boston-based firm has adopted an unconventional structure that could allow it to raise additional capital and invest up and down the risk-return spectrum.

Longfellow Real Estate Partners has raised $500 million for its debut real estate fund, targeting properties in the US’s innovation and knowledge industries, PERE has learned.

The Boston-based firm launched the vehicle in April 2017 with an initial $400 million target. Instead of a traditional commingled real estate fund, Longfellow Strategic Value Fund is effectively a club vehicle consisting of non-US institutional investors, including sovereign wealth funds.  Longfellow previously raised and invested capital through programmatic joint ventures.

The fund has an unconventional structure in that investors could potentially increase their original capital commitments through follow-on tranches. Those future tranches would not include any new investors.

Through the fund, Longfellow will invest in life science and technology real estate across the US, particularly in growth markets that support innovation and knowledge industries. What is also atypical, however, is that investors would be able to invest across core-plus, value-add and opportunistic risk-return strategies, including the purchase of stabilized properties, repositioning assets for use by life science and technology companies and ground-up development of new buildings. However, the fund is likely to be more heavily weighted toward value-add investments.

Longfellow has yet to deploy capital from the new fund. Recent investments include the acquisition of 100, 125 and 150 Cambridge Park Drive, a 650,000-square-foot science and technology campus in Cambridge, Massachusetts; and the ground-up development of two buildings totaling 320,000 square feet and a parking garage in Durham.ID, a 1.7 million-square-foot mixed-use project in North Carolina’s Research Triangle being developed in collaboration with Duke University and Measurement Incorporated. The firm currently manages about $1 billion of assets.

Longfellow was founded in 2009 by managing partners Adam Sichol and Jamison Peschel, Sichol previously worked in acquisitions and development at Chicago-based developer Higgins Development Partners, while Preschel had been an investment professional at RREEF Global Opportunity Funds.

Hodes Weill acted as financial advisor and placement agent to Longfellow.