Origin closes Fund III on $150m – Exclusive

The firm had 470 limited partners in its largest value-added vehicle, with capital coming primarily from non-institutional investors.

Origin Investments has closed its latest fund on $151 million, just a hair above its $150 million target, PERE has learned.

The Chicago-based firm launched Origin Capital Fund III in December 2015 and held a first close for the vehicle in March 2016 on $55.5 million, PERE previously reported. For the fund series, the firm is focusing on multifamily and office properties in eight US markets with growing populations and job markets, including Austin, Atlanta and Denver.

Origin launched Fund II in 2013 and closed the vehicle in May 2014 on $64.7 million. About 92 percent of Fund II’s 65 investors returned to commit to Fund III, co-founder David Scherer told PERE.

For Fund III, Origin raised new capital through the wealth management divisions of five registered investment advisors, which he said increased both the fundraise and the number of investors considerably. About $98 million came from high-net-worth investors, while $42 million came from family offices. The minimum investment for the fund was $100,000.

“We found the institutions that were interested in us wanted us to set up funds that only service them,” Scherer said. “I understand why they want to do that; they want to put out capital on their time, but we only have one team and we’re only in eight cities. If you want us to set up something for you, that’s competing with our fund and it would create less of a value for our existing clients.”

Scherer and co-founder Michael Episcope together committed $11.7 million of their capital to the vehicle.

Origin has deployed about a third of Fund III’s capital in eight assets, ranging from a Class A office building in Raleigh, North Carolina to an apartment complex in suburban Chicago. The fund has an internal rate of return target of 16-18 percent. Fund II has generated a 22 percent net IRR to date.

Origin has about $600 million of assets under management.