Madison Realty Capital is looking to expand its presence across the US, with San Francisco and Los Angeles likely candidates for a new location, PERE's sister publication, Private Debt Investor, reported Friday.
The New York-based real estate investor plans to open a West Coast office in the next 12 months, according to a source familiar with the situation. No location has is set in stone yet, though the two California cities are strong contenders.
Madison declined to comment.
The firm is currently looking for the right slate of individuals to run its investment shop in the new location, which would start by focusing on real estate debt. Madison will seek to finance industrial, retail and hotel properties as well as multi-family buildings.
Much of the firm’s activity is currently concentrated in the New York metropolitan area. However, it will do deals in select other areas, like the $65 million construction loan it provided to finance the building of condominiums in Fort Lauderdale, Florida, which was announced last week.
The firm’s latest fund raised $695 million, closing in May 2016. By using 1:1 leverage at the deal level, Madison has approximately $1.4 billion in total capital for the fund, the source said, but due to the short-term nature of some of the loans, the fund recycles and could have up to $2.8 billion in investable capital. The fund listed a $600 million target and a $750 million hard-cap, according to documents from the New Mexico Public Employees Retirement Association.
It is targeting a net internal rate of return of 16 percent and has a six-year life with a four-year investment period, according to an audio recording of the October 2015 meeting when the pension fund approved a $50 million commitment. In addition, the fund invests in one- to two-year loans with a loan-to-value rate of 60 percent.
Alongside NM PERA, commitments included a $150 million allocation from the Oregon Public Employees’ Retirement System and a $40 million commitment from the New York State Retirement System.