Walton Street Capital collects $415m for latest RE debt vehicle

The Chicago-based firm invests in commercial spaces with rental income potential.

Walton Street Capital has raised $415 million for the first close of its second dedicated real estate debt fund, Walton Street Real Estate Debt Fund II, PERE sister publication Private Debt Investor has reported.

The Chicago-based real estate investment firm held the close on September 13, according to a Securities and Exchange Commission filing. The first fund in the series closed in May 2016 and raised $654 million, PERE previously reported.

Six investors have so far committed to Fund II. Investors in its predecessor vehicle included The Texas Municipal Retirement System, which invested $100 million.

Fund II targets commercial real estate with rental income potential in the US and other global markets such as Mexico, where the firm has a second office. Fund II’s hurdle rate is 6 percent with a management fee of 1.25 percent annually. Pacific Capital Partners Limited and Mercury Capital Advisors LLC acted as placement agents for the fund.

The firm and Mercury Capital Advisors declined to comment.

There are 146 real estate debt funds in market currently seeking $51.2 billion, according to PDI. Of those, around half are looking to deploy capital in North America, while 19 percent plan to deploy capital in Europe, 18 percent in multiple regions of the world, 12 percent in the Asia-Pacific and 2 percent in Latin America.

Of those 146 vehicles in market, more than two dozen are targeting fundraises similar to the Walton Street vehicle’s current size. Some 25 funds are seeking between $250 million-$500 million, 24 are targeting $500 million-$1 billion and 16 are after more than $1 billion.

Walton Street was founded in 1994 and has invested over $10 billion. The firm has raised $1.59 billion its latest real estate equity vehicle, Walton Street Real Estate Fund VIII, which has a $1.5 billion target, according to PERE data.