Oaktree Capital Management is understood to be targeting a $3 billion capital raising for its largest global real estate fund yet, having kicked off marketing for Oaktree Real Estate Opportunities Fund (ROF) VII.
The new capital raise marks a quick return to the fundraising trail after closing on a total of $2.7 billion in commitments for Fund VI in late December.
In an investor call yesterday, Oaktree managing principal John Frank said that the distressed debt investor had launched the new fund a week ago. “Real estate investment opportunities within our niche remain plentiful,” he said. He added that real estate, along with Europe and power, were among the sectors and regions where the firm was finding attractive opportunities. “There’s no question that bargains are harder to come by, but our experience and relationships are great assets, allowing to continue access opportunities,” Frank said.
Frank did not provide any further details on the fund and the firm declined to comment further. But PERE understands that the firm is targeting $3 billion for the vehicle.
ROF VII will pursue a similar strategy to the prior funds in the series and target direct property investments; corporate investments; CMBS and related securities; residential land, assets and loan portfolios; small balance commercial loan pools; and non-US investments.
In a February conference call, Frank noted that ROF VI was already 40 percent drawn, and therefore new fundraising for the firm’s real estate opportunistic strategy “may not be far off.” As of June 30, $1.87 billion, or approximately 70 percent, of the fund’s $2.68 billion capital had been drawn, according to Oaktree’s second-quarter results. Since inception, the vehicle has been generating a gross internal rate of return of 18.3 percent and a net IRR of 9.7 percent, with a 1.1x multiple, the results said.
Meanwhile, Oaktree Real Estate Debt Fund remains in market and had collected a total of $698 million in total commitments as of June 30, up from $500 million in February. The equity haul for the fund, however, fell short of the firm’s expectation to raise more than $1 billion for the vehicle by mid-year.
Oaktree reported adjusted net income of $134.7 million for the second quarter, dropping nearly 50 percent from $297 million in the same year-ago period, as a result of lower incentive income. Its assets under management, however, hit an all-time high of $91.1 billion as of the end of the second quarter, up from $76.4 billion in the second quarter of 2013.