Northwood raises $1bn+ in second offering

Northwood Investors has closed a second offering of Northwood Real Estate Partners and a related co-investment vehicle with more than $1 billion in new commitments, bringing total capital raised to about $2.3 billion. The New York-based real estate investment firm, which was founded by John Kukral in 2006, closed its first offering with $1.25 billion in commitments in August 2007 and invested the majority of that capital last year and this year.

“We are thankful for the continued confidence from our existing limited partners and very pleased with the support from our new institutional investors,” said Kukral, the former CEO of Blackstone Real Estate Advisors, in a statement. “This successful capital raise is significant, particularly given the challenging fundraising environment currently.” Northwood’s investor base includes endowments, foundations, private pension plans, family offices and high-net-worth individuals.

Northwood held a first close on its second offering on June 21, raising more than $760 million, and held subsequent closings totaling approximately $300 million, with a final close on September 19. Northwood Real Estate Partners, which is targeting distressed real estate companies and assets, has a unique ‘evergreen’ structure, where it can hold assets for up to 15 years and re-invest profits back into the vehicle. With an evergreen vehicle, the firm is allowed to add capital to the fund once each calendar year, which is distinct from open-ended funds that can accept capital on a more frequent basis. A second offering is considered a one-time capital raise, even with multiple closings.

Northwood Real Estate Partners will continue to pursue investments in multiple property types, particularly office buildings, shopping centers and hotels, throughout the US and selectively in Europe. To date, the firm has committed more than $1 billion in equity to 14 investments in the US and Europe. Recent deals include the 214-room Cheeca Lodge & Spa in Islamorada, Florida, which the company acquired from Cheeca Holdings for $101.3 million, and the 899-room New York Palace Hotel, which was purchased from the Brunei Investment Agency for approximately $377 million, according to real estate research firm Real Capital Analytics.