Oppo funds continue to prevail with Cerberus’s $2.8bn final close

The New York-based private equity firm’s CIREP V marks the second higher-risk, higher-return property fund closing to be announced in a week.

Cerberus Capital Management has raised approximately $2.8 billion in commitments for Cerberus Institutional Real Estate Partners V, the latest vehicle in its flagship global opportunistic real estate fund series.

The firm raised more than $2.5 billion for CIREP V, while $300 million was raised as a “dedicated investor fund,” akin to a typical separately managed account or a sidecar to the main vehicle, PERE understands.

CIREP V was launched in January 2020 with a $2 billion initial target, according to PERE data. Investors in the fund include a $225 million commitment from the Florida Retirement System Trust Fund, $40 million from the Los Angeles City Employees’ Retirement System and $60 million from the Los Angeles Water and Power Employees’ Retirement Plan.

Cerberus had closed on $1.8 billion for the predecessor fund in the series in 2017.

CIREP V’s capital will be invested in direct assets, real estate companies as well as real estate-related debt, including non-performing loan portfolios, according to a company statement.

“The investment landscape plays to the strengths of our global real estate franchise,” said Lee Millstein, president of Cerberus Global Investments and global head of real estate. “There are market dislocations and macro-trends that are driving compelling opportunities across our broad platform. Our team will continue our disciplined approach to investing opportunistically, establishing innovative partnerships and applying our operating capabilities and experience to solve complex problems.”

Cerberus’s capital raise is the second major opportunistic haul within a week, buoyed by the expectation of growing distress and other dislocation investment opportunities a year after the pandemic outbreak. Oaktree Capital Management’s $4.7 billion close for its largest-ever property fund, Oaktree Real Estate Opportunities Fund VIII, also exceeded the firm’s initial $3.5 billion target.

According to PERE’s Q4 2020 fundraising report, an estimated $35.4 billion was raised via opportunistic funds in the full year, accounting for around 32 percent of the $110.7 billion in aggregate fundraising. The opportunistic fundraising haul has continued its momentum this year too. As of March 31, 2021, the top 10 opportunistic real estate funds in the market are each targeting over $1 billion in capital. The largest is the Starwood Global Opportunity Fund XII seeking $7.5 billion, followed by the $6 billion Carlyle Realty Partners IX.