TPG Real Estate finally crossed the finish line for its debut commingled real estate fund – but it didn’t win any trophies for fundraising speed.
The Fort Worth, Texas-based private equity firm closed TPG Real Estate Partners (TREP) II in October with about $2.1 billion after more than 18 months of fundraising. The fund, one of the largest initial property funds ever, exceeded its target of $1.5 billion to $2 billion with commitments from pension plans, sovereign wealth funds, insurance companies and other institutional investors.
With TREP II, the firm lined up investors in earlier TPG vehicles. The New Jersey Division of Investment, for example, committed $125 million to the new fund, supplementing a $350 million partnership that began in 2013.
According to pension plan documents, TREP II’s investment strategy will focus on niche sectors to build platforms and achieve scale; investments in out-of-favor sectors; distressed assets and corporate platforms; and companies that need better leadership.
“We are proud to have reached this milestone and are appreciative of the continued support from our global investor partners,” said Kelvin Davis, founder and co-head of TPG Real Estate, in a statement last month.
TPG came later to the real estate fund world than some of its private equity peers, pushing into the asset class in 2009 through its buyout funds. In 2011, TPG recruited Westbrook Partners managing principal Avi Banyasz to help build up its real estate team and Robert Weaver, who led fundraising efforts. Weaver left in July to become Advent International’s managing director.
The firm gathered capital during a fundraising upswing, with commitments reaching a six-year high in 2014, according to PERE Research and Analytics.
TPG has committed over $600 million to investments from the fund to date, including Evergreen Industrial Properties, a distribution leasing center; self-storage company LifeStorage; and TriGranit, a Hungarian real estate developer.