Torchlight Investors has gathered $445 million during its second round of fundraising for its latest debt fund, Torchlight Debt Opportunity Fund V, bringing the fund’s total equity haul to date to $810 million. Torchlight declined to comment, but PERE understands that the New York-based firm is expected to close Fund V at or above its target during the fourth quarter.
Torchlight launched Fund V in October, with a $1 billion target, and held a first close of $367.68 million on Fund V in March, according to a filing with the US Securities and Exchange Commission. Among the fund’s limited partners to date are the Contra Costa County Employees’ Retirement Association, which earmarked $75 million in September and San Diego City Employees Retirement System, which committed $20 million to the fund in May. The firm raised $956 million for the predecessor fund in 2012.
The fund’s strategy is to invest primarily in commercial real estate debt opportunities such as commercial real estate loans, commercial mortgage-backed securities (CMBS), CMBS interest-only strips and commercial real estate collateralized loan obligations. Torchlight is targeting a net return of 13 percent to 15 percent for Fund V, and leverage of no more than 30 percent of the fund’s total assets. The firm is charging management fees of 1.5 percent on both committed and invested capital.
To date, Torchlight has invested $125 million of the Fund V equity. Earlier this month, the firm announced that it had made a $27 million preferred equity investment on behalf of Fund V to finance the acquisition and renovation of the Promenade at Howard Hughes, a two-story, Class A retail center located in Los Angeles. The firm’s first Fund V investment, announced in March, was $41 million of acquisition financing on a Class A office property, located in Allentown, Pennsylvania.
Torchlight was founded in 1995 as ING Clarion Capital by Dan Heflin. From 2002 to 2010, Dutch insurance and banking conglomerate ING held a 40 percent stake in the firm, before Heflin and his partners purchased the interest from ING, which was required to sell most of its non-core investments in order to receive a bailout from the Dutch government following the global financial crisis. The firm, now wholly owned by Heflin and his partners, was subsequently renamed Torchlight Investors and currently has $4.5 billion of assets under management.