Pennybacker holds first close on Fund III

The Austin-based real estate investment firm’s initial close for its third commingled fund includes commitments from two large Texas pensions.

Austin-based real estate investment firm Pennybacker Capital has held a first close on $102 million for its third commingled fund, Pennybacker III, according to a filing with the Securities and Exchange Commission. The value-added fund, which is using HFF as a placement agent, is targeting $300 million in total commitments. 
Thus far, two of the biggest Texas pension plans have been among Pennybacker’s investors for Fund III. The Teacher Retirement System (TRS) of Texas approved a $35 million commitment in December, while the Employees Retirement System (ERS) of Texas committed $15 million to the fund. 
Both pension systems had committed to Pennybacker’s prior offerings as part of emerging manager programs. Bob Sessa, director of real estate at ERS, told PERE that the pension chose to invest directly with Pennybacker this time around because the fund was a “good fit” and they considered the firm to be a “graduated” manager. 
Pennybacker III has a regional-focused strategy, aiming to invest in and operate middle-market multifamily, retail, office and industrial assets in sustainable growth markets, with a primary focus on the four major Texas markets. According to the firm’s website, Pennybacker targets “mismanaged, miscapitalized or other situationally distressed properties and debt instruments that are complex, off-market and/or undervalued.”
Pennybacker’s previous fund, Pennybacker II, closed on $103 million in equity in 2011. Along with TRS and ERS, investors included Hatteras Investment Partners and The Endowment Master Fund, according to PERE’s Research & Analytics division.