After being in the market for just a few months, Westbrook Partners already has raised approximately 75 percent of its $2 billion target for its latest global value-added real estate fund, PERE has learned.
Although representatives from Westbrook declined to comment, sources familiar with the matter have revealed that the New York-based private equity real estate firm has raised more than $1.5 billion in commitments on behalf of Westbrook Real Estate Fund IX, which is seeking a total of $2 billion.
The capital that Westbrook has raised thus far for Fund IX has come from more than 40 US institutional investors. This includes early commitments of $200 million apiece from the endowments of Harvard University and Massachusetts Institute of Technology. Fund IX is expected to close this summer, according to sources.
PERE understands that although Westbrook is not using a placement agent for prior investors, the firm has hired Probitas Partners to seek capital from new investors.
In November, PERE learned that Westbrook had changed the profit-sharing structure for Fund IX 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.
Through the fund, Westbrook will seek to invest across all property types in major cities such as New York, Washington DC, San Francisco, Los Angeles, London, Paris and Tokyo. The firm, which is targeting a gross IRR of 18 percent for the fund, primarily is looking at existing properties as opposed to development deals.
Westbrook’s prior real estate vehicle, Fund VIII, closed on $2.3 billion in equity in May 2008. Investors in Fund VIII 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.
Separately, Westbrook appeared in the No. 9 slot of this year’s PERE 30, our annual ranking of the 30 largest private equity real estate fund managers based on capital raised over the past five years. For full coverage on the PERE 30, click here.