Morrison Street closes seventh fund

The real estate debt fund manager has raised a fund more than double the size of its previous vehicles.

Morrison Street has completed the capital raise for its seventh fund, Morrison Street Debt Opportunities Fund, reaching its $200 million target.

The Portland, Oregon-based firm launched Morrison Street Debt Opportunities Fund in 2015 and held a first close of $29.3 million in October 2015, according to filings with the Securities and Exchange Commission. A year later, the firm had raised $142.38 million and had hired Accord Capital Partners, a San Francisco-based advisory and capital raising firm, as placement agent.

The fund drew capital from both existing and new investors. Limited partners included Spokane Employees’ Retirement System, which committed $5 million to the fund in December, as well as other US pension plans, endowments, foundations, family offices and registered investment advisors.

Morrison Street Debt Opportunities Fund is more than double than size of the firm’s previous funds, including Morrison Street Fund IV and Fund V, which raised $71 million and $11.35 million in 2011 and 2014, respectively, according to PERE data.

Morrison Street’s investments are structured as mezzanine debt, B-notes and preferred equity. The firm targets stabilized properties, either secondary assets in US primary markets or prime assets in secondary markets, with a focus on multifamily, office, industrial/flex, retail and hospitality properties. The firm’s mezzanine debt and preferred equity transactions are generally between $2 million and $10 million in size, have a maximum loan-to-value ratio of 85 percent-90 percent, and have terms of three to 10 years and three to five years, respectively, according to its website.

The firm has made 21 mezzanine investments that represent approximately two-thirds of the fund’s capital. Recent transactions included a $3.5 mezzanine loan on North Run Business Park, a flex/office property in Richmond, Virginia; and an $8.85 million mezzanine loan on PNC Center, a Class A office building in Indianapolis, Indiana. Morrison Street Fund IV was generating an internal rate of return of 16.97 percent as of December 31, according to an investment performance report from Spokane Employees.

Founded in 2002, Morrison Street is a partnership between former DLJ Real Estate Capital Partners executive Rance Gregory and Norris, Beggs & Simpson, a local commercial real estate firm. In December 2015, Accord, which also has principal investment and investment management divisions, made a corporate platform investment in Morrison Street via a participating debt structure.