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Redwood-Kairos nears $200m fund target

The California firm will continue focusing on mixed-use real estate with its fourth fund.

Redwood-Kairos Real Estate, a real estate investment company based in Rancho Santa Margarita, California, is closer to fulfilling a $200 million equity target for its fourth fund.

The firm manages about 60 properties across the country. Its latest fund, the Redwood-Kairos Real Estate Value Fund IV, has about $125 million committed. The fund targets a return between 15 and 20 percent through mixed-use properties. Redwood-Kairos also plans to invest about 8 to 9 percent of the capital in mezzanine debt related to the properties.

“It’s a continuation of the same strategy and investment approach,” said Camila Kremer, a member of the firm’s investor relations team. “The process has been the same from the beginning.”

The fund launched last September, according to a filing with the US Securities and Exchange Commission. Kremer said the vast majority of investors have put money into earlier funds, with institutional investors making up about a third of the pool. The firm itself has about $7 million in the fund, with no cap on its own investment.

Redwood-Kairos has no fee for committed capital, relying on a 1.5 percent management fee for invested capital. Limited partners that commit at least $20 million have a 9 percent preferred return, and the others have an 8 percent return.

The firm did not use a placement agent.

“This entire business has been very relationship driven,” Kremer said. “It started off as a family office and it grew organically.”
Carl Chang, the firm’s founder, started investing in real estate in 1993 with money from an unusual source: his brother’s prize earnings as a top-ranked tennis player. Carl Chang coached his younger brother, Michael, who in 1989 won the French Open, becoming the youngest male winner of a Grand Slam singles title.