TA Realty has closed its latest US-focused value-add real estate fund at approximately its $1.2 billion capital raising target.
Realty Associates Fund XII reached a final close at the end of February after requesting a six-month fundraising extension from investors. The vehicle was officially launched in June 2018, according to a filing with the Securities and Exchange Commission, and a first close was held at the end of the same month.
At the time the fund was brought to market, PERE reported on the firm’s expectations of completing the capital raise within about nine months.
James Raisides, partner at TA Realty, told PERE the fundraising timeline was changed to accommodate investors. He added that the proposed extension of six months was officially communicated to investors.
“We did see significant interest in the fund and with LPs’ busy schedules with regards to juggling many different closings, whether real estate or other asset classes, we did get some requests to accommodate timing,” he said. “We extended [the fundraising period] in order to meet the needs of our investors, especially those that have been with us across multiple funds, in order for them to not miss the vintage.”
Like previous funds in this series, Fund XII saw a 50-60 percent re-up rate. According to PERE data, investors include the Arkansas Public Employees Retirement System, Chicago Policemen’s Annuity & Benefits Fund with a $40 million commitment and Chicago Teachers’ Pension Fund with a $35 million commitment, among others.
Fund XII, which did not have a hard-cap, was closed at a time of rising global uncertainty as the coronavirus outbreak continues to rattle countries globally.
“It is nice to have the capital already raised and really focus our attention to the rapid changes in the market and look for opportunities,” said Raisides on how the firm is planning for the current business climate. ”We have been through these cycles many times in the past and we are a real estate group that is seasoned and knows how to remain disciplined in a market like this. Patience and discipline are going to be important as we continue to monitor the changes that will unfold.”
Fund XII will continue the same investment strategy as TA Realty’s predecessor vehicles, focusing on major US markets. The vehicle’s investment period runs for two years after final close. Approximately 45-50 percent of the fund’s portfolio is expected to be industrial assets. The firm is understood to have made some industrial investments from the fund already but declined to disclose specifics. A net internal rate of return of 10-12 percent is being targeted from the fund’s investments.
In terms of leverage, the firm has a cap of 50 percent, but it will typically target 40 percent.
TA Realty has raised a total of more than $10.5 billion of equity for its flagship value-add funds since its inception. The predecessor fund, Fund XI, was closed on $879.2 million in May 2017.