PCCP raises largest opportunistic fund to date – Exclusive

PCCP has held a final close on its seventh opportunistic real estate equity fund, PCCP Equity VII, raising a total of $600 million in commitments.

The capital raise for fund, which was launched in early 2015, surpassed the original $500 million target by 20 percent. PCCP held a first close on $271 million for the fund in May 2015, and increased its equity haul to more than $364 million as of April 29, according to filings with the US Securities and Exchange Commission. The firm, which is led by founding partners William Lindsay (pictured) and Donald Kuemmeler, held the final close for the fund this week.

The fund received commitments from 12 institutional investors, including public pension plans, corporate plans and insurance companies. They include the Teacher Retirement System of Texas and State of Wisconsin Retirement Board, both of which pledged $150 million; California State Teachers’ Retirement System, which committed $100 million; and City of Fresno Retirement Systems (CFRS) and Montana Board of Investments, which each earmarked $15 million, according to PERE research.

Equity VII is more than twice as large as its predecessor fund, which closed in 2012 with $296 million. It is also the firm’s largest opportunistic real estate fund to date, surpassing the next-largest fund in the series, Equity V, which attracted a total of $474 million in 2011.

As of December 31, Equity V was generating a gross return of 33 percent and net return of 16.6 percent, with a gross multiple of 2.16x and net multiple of 1.92x, according to documents from CFRS. Meanwhile, Equity VI has an estimated gross return of 20.1 percent and net return of 16.6 percent, with a gross multiple of 1.83x and net multiple of 1.62x. The firm is targeting 18 percent to 20 percent gross returns and 14 percent to 16 percent net returns for Equity VII, according to the CFRS documents.

As with other funds in the Equity series, Equity VII’s strategy is focused on opportunistic equity investments in middle-market, institutional-quality commercial real estate assets in the US. Transactions typically range from $10 million to $40 million in equity per deal. To date, PCCP has deployed approximately $235 million – nearly 40 percent – of the fund’s equity into 13 closed transactions.

Equity VII deals have included the July 2015 purchase of 715 Peachtree, a vacant 10-story office building in Atlanta, which drew $31 million from the fund; and the August 2015 acquisition of a troubled loan on a 1.1 million square foot power retail center in Phoenix, which represented an equity investment of $34 million from the vehicle.

Hodes Weill & Associates acted as placement agent for PCCP Equity VII.

The capital raise for Equity VII comes nearly a year after PCCP’s September 2015 close on $909 million for its PCCP Credit VI, a real estate debt fund focused on investing in floating rate senior loans on value-add, middle-market properties. The firm also exceeded that fund’s original target, which was $750 million.