Singerman Real Estate has wrapped up a quick fundraise for SRE Opportunity Fund III, closing on $500 million in less than six months.
The Chicago-based real estate investment firm launched the fund over the summer and held a first close on $285 million in September. By December, the firm had reached its hard-cap for the fund, which had an original target of $400 million.
“It was a very, very efficient capital raise,” Seth Singerman, managing principal of SRE, told PERE. “I think first and foremost, we were fortunate to have great continued support from our existing institutional investor base and really complemented that with a small number of new and high-quality LPs. That was the combination that led to a successful execution.”
All of the fund’s investors are US-based and consist of endowments, foundations, public and corporate pensions, large family offices and money management firms. They include the Pennsylvania State Employees’ Retirement System, which committed up to $50 million to the fund and up to an additional $50 million to a discretionary co-investment fund in September. The commitment to SRE represented a new relationship for the pension plan.
Fund III is nearly double the size of its predecessor, which collected a total of $275 million in April 2015. Fund II also hit its hard-cap after approximately six months in market.
The firm typically pursues complex and value oriented real estate investments, both in operating assets and loans, and invests across all property types. The firm has a national footprint, investing from Florida to Oregon. Typical deal sizes generally require $7 million-$20 million of equity, but SRE also has the capacity to do much larger transactions through co-investments. SRE began deploying capital from Fund III in the couple of weeks and to date has invested less than 5 percent of the fund.
Similar to its previous funds, SRE is targeting an 18 percent net return and 1.75x multiple for Fund III. The firm declined to provide specifics on Fund II’s performance to date, but PERE understands that the fund was on track to meet its targeted return and multiple.
“I think our strategy and mandate is very consistent with what it has historically been,” Singerman said. “We’re emphasizing risk-adjusted returns. The point that is only heightened is the fact that we’re later in the cycle and that the focus on maintaining discipline is critical. When we’re climbing a mountain, the higher you get, the thinner the air and the more risk you take on.”
Although SRE would fit the bill of an emerging manager as defined by some institutional investors, and has received capital from some dedicated emerging manager programs in the past, the firm has been predominantly viewed as a traditional real estate manager during its seven-year history, said Singerman.
That said, “we’re constantly emerging,” he said. “We’re in the investment management business and so we need to continuously execute and prove ourselves to our investors.”
Singerman, who founded in his namesake firm in 2010, formerly was a managing director at GEM Realty Capital, where he had senior investment responsibilities for its direct real estate and public real estate securities platforms. SRE currently has 14 employees and more than $900 million of assets under management.
Both SRE and PERE will be in attendance at the Real Estate Emerging Managers Summit in Austin on January 10-11. Stay tuned for more coverage from the event.