Rubenstein closes third office fund

The Philadelphia-based firm closed the value-added fund’s predecessor vehicle on $515m.

Rubenstein Partners has corralled $565 million for its third fund, the firm said Tuesday.

The Philadelphia-based private equity real estate firm launched Rubenstein Properties Fund III in May 2015, according to an SEC filing. The firm, which was founded in September 2005, focuses on value-added office investments primarily in the eastern US.

Rubenstein held a first close in May on $470 million with commitments from 22 investors, PERE previously reported. The fund’s predecessor, Rubenstein Properties Fund II, which was launched in May 2012, had a $500 million target and ultimately closed in April 2014 on $515 million in commitments, according to the firm. Rubenstein was targeting a “moderately larger” size for the latest fund, a source told PERE.

Rubenstein is targeting a 13 percent to 15 percent net internal rate of return for its latest vehicle, PERE understands. Fund II had a 14.5 percent net IRR as of September 30, according to Kentucky Retirement Systems, one of the investors.

The fund’s investor base comprises public and private pension funds, university endowments and family offices. Public investors in Rubenstein Properties Fund III include the Texas Municipal Retirement System, which committed $75 million, and Maine Public Employees’ Retirement System, which allocated $30 million, according to PERE data.

“We’re pleased to announce the final closing of Rubenstein Properties Fund III at a level surpassing the previous two funds, and positioning Fund III to take advantage of value-added office investment opportunities in its target markets,” founder David Rubenstein said in Tuesday’s announcement. “We’re grateful for the continued support from many longstanding investors and are excited to welcome several new investors into the platform.”

The firm’s most recent publicly available transaction was the January purchase of a 60 percent stake in Philadelphia’s Wanamaker Building for $108.2 million, according to data provider Real Capital Analytics. The site now houses a Macy’s department store and offices, and is 97 percent occupied.

Rubenstein has about $1.2 billion in assets under management.