PCCP has raised a total of $1.3 billion for PCCP Equity Fund VIII, its largest real estate equity fund to date, PERE has learned.
The Los Angeles-based manager hit its $1 billion hard-cap for the opportunistic real estate fund and raised an additional $300 million for a sidecar vehicle, which adds up to a total of $1.3 billion in equity available for the strategy. PERE understands that the main fund was oversubscribed by $300 million but the firm capped the vehicle at $1 billion. At $1 billion, PCCP’s eighth equity fund is nearly 70 percent larger than its predecessor, PCCP Equity VII.
Fund VIII also marks the first time that the manager accepted commitments from Asian investors, which accounted for approximately 10 percent of the fund’s equity. PERE understands 30 percent of capital in Fund VIII came from foreign investors, a ratio greater than any of PCCP’s previous funds. Foreign capital commitments were evenly distributed across Middle-Eastern, European and Asian investors. By comparison, international investors accounted for approximately 10 percent of Fund VII.
The eighth real estate equity fund in the series launched in February 2018, and PERE previously reported the fund was expected to surpass its $750 million target back in February. Like the previous vehicles in the opportunistic series, Fund VIII will target properties in the top-25 US markets. Investments will be made across the four major property types of office, industrial, multifamily and retail and will have a leverage limit of 65 percent. The manager is targeting an 18-20 percent gross internal rate of return and 14-16 percent net levered IRR for Fund VIII, according to a report from the City of Fresno Retirement Systems. PERE understands Fund VIII is expected to be 50 percent committed to investments by the end of the year.
In comparison, predecessor fund PCCP Equity VII, which launched in February 2015, closed on $601 million in August 2016. The seventh fund in the series had a $500 million target and $750 million hard-cap, according to a presentation from CFRS. Investors included the California State Teachers’ Retirement System, City of Fresno Retirement Systems, Montana Board of Investments and State of Wisconsin Investment Board. Fund VII was previously the firm’s largest opportunistic real estate equity fund and double the size of Fund VI, which closed on $296 million in 2012.
Fund VII was generating an IRR of 15.94 percent as of June 30, 2018, according to a presentation from the Montana Board of Investments.
PCCP also invests in real estate debt. The firm closed on a $1.25 billion real estate credit fund, PCCP Credit IX, last year. PERE understands the fund will largely be invested by the end of this year or early 2020.