Stockbridge Capital Partners is raising its first value-added real estate fund, targeting between $600 million and $800 million for opportunities in the US.
The firm, which has previously sponsored three opportunistic funds and one value-added separate account, is looking at internal rates of return of between 14 percent and 16 percent, according to documents from an investment committee meeting of Pennsylvania Public School Employees' Retirement System (PSERS).
The fund, called Stockbridge Value Fund, will focus on “value creation through management, leasing, redevelopment, development and repositioning” of properties on the US East and West coasts, and along the sunbelt markets, such as Austin, Dallas and Houston in Texas.
Stockbridge is in the market raising its third opportunistic vehicle, Stockbridge Real Estate Fund III, targeting $3 billion, according to proprietary data from PERE magazine. A Stockbridge spokesman declined to comment.
According to PSERS, Stockbridge’s first opportunistic fund, Stockbridge Real Estate Fund I, returned a 2.3x multiple and gross IRRs of 27 percent, as of the end of March 2008. Fund I, the pension continued, has liquidated more than half of its investments, with unrealized assets expected to produce a 2.3x multiple and gross IRRs of 28.5 percent.
Last year, Stockbridge hired 10 professionals from the private equity real estate arm of Deutsche Bank, RREEF, including Steven Steppe, former managing partner and chairman of RREEF North America, Dwight Merriman, former managing director of RREEF, in charge of RREEF’s development and value-added investment opportunities in North America and Sol Raso, who was former RREEF global client relations group head until 2007.
In an interview earlier this year with Institutional Real Estate Letter, Steppe said Stockbridge had focused “principally on the opportunistic side of the business. We feel that we can really make a difference by adding complimentary strategies, including value-added and core investing … In short, we wanted to go back to the excitement of growing a company. Stockbridge gives us that opportunity.”
Stockbridge has also refinanced a mixed-use joint venture development in Linden, New Jersey, securing a $70 million two-year, adjustable-rate loan from HSBC Bank and participants US Bank and The Private Bank.
The joint venture between Stockbridge’s opportunistic real estate funds and REIT Duke Realty Corporation will see the 104-acre, former GM manufacturing plant in Linden demolished and the land redeveloped, according to a press release from debt placement firm, Holliday Fenoglio Fowler.