Managers

Carmel holds final close on Fund VI – Exclusive

The San Francisco-based multifamily real estate firm has raised its second consecutive real estate fund exceeding $1bn. 

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Carmel Partners has held a final close on its latest US multifamily real estate fund, Carmel Partners Investment Fund VI, collecting $1.025 billion – slightly above its $1 billion target.

Fund VI attracted more than 35 existing and new investors, including several European institutions. Limited partners included the University of Michigan Board of Regents, which committed $50 million, San Francisco Employees’ Retirement System, which earmarked $100 million and Texas County and District Retirement System, which agreed to invest $50 million, according to PERE research.

Of Fund VI’s limited partners, approximately 83 percent were existing investors, with new capital coming from corporate and public pension plans and European family offices and foundations. Of the fund’s investor base, 60 percent were endowments and foundations, 10 percent were high-net-worth investors and the remainder were pension plans.

On behalf of the fund, Carmel will make multifamily investments in select supply-constrained, high barrier-to-entry US markets including the San Francisco Bay Area, Los Angeles, Denver, Seattle, Honolulu, Washington, DC, and New York City. Investments can include ground-up development, acquisitions, renovations and debt. The Sawn Francisco-based firm pursues deals ranging from $50 million in size to more than $600 million, with a net return target of 13 percent to 15 percent.

“Since 2014, we’ve gravitated more and more towards ground-up development,” said Ron Zeff, Carmel’s founder and chief executive. “We’ve been able to develop properties at all-in cost of equal to or less of properties that are 10 or even 20 years old.”

Indeed, Carmel’s sole investment to date for Fund VI is the more than $100 million development of a high-rise doorman building on a full-block site in downtown Oakland.

The firm previously also raised $1.025 billion for its previous fund, Fund V, in July 2014. The vehicle is now understood to be more than 95 percent invested. Carmel’s first four funds are understood to be top-quartile performers, according to one market source.