New York-based private equity real estate giant Westbrook Partners has launched its ninth global real estate fund and is seeking $2 billion in equity commitments, PERE has learned.
Although Westbrook declined to comment, sources familiar with the situation have revealed that Westbrook Real Estate Fund IX is a value-added vehicle targeting all asset classes in New York, Washington DC, San Francisco, Los Angeles, London, Paris and Tokyo. The fund will seek to invest primarily in existing properties as opposed to development deals.
Prior to marketing, Fund IX received a total of $200 million in commitments – 10 percent of the target – from two investors: the endowments of Harvard University and Massachusetts Institute of Technology. The fund, which is targeting a gross IRR of 18 percent, is now open to other institutional investors.
Among some of the structural tweaks to its latest fund, Westbrook has changed the profit-sharing structure from a deal-by-deal to a pooled basis, which means gains and losses will be netted out before profits are divided between the firm and its LPs.
The firm also eliminated a previously used “catch-up” provision, which entitled Westbrook to a larger share of the profits after the LPs receive their preferred return. In exchange for that concession, Westbrook lowered the preferred return hurdle from 10 percent to 6 percent.
Westbrook's last real estate vehicle, Fund VIII, closed on $2.3 billion in commitments in May 2008. Investors in that fund include the Arizona State Retirement System, the New Jersey Division of Investment, the New York State Common Retirement Fund, the Pennsylvania State Employees' Retirement System, the State of Wisconsin Investment Board and the Teacher Retirement System of Texas, according to data from PERE Connect.
Fund VIII still has roughly $1 billion of equity to deploy before its investment period ends next September. As a result, Fund IX won't begin buying properties until its predecessor is fully invested.