Menlo Equities has begun marketing its first ‘perpetual life’ real estate fund, according to industry sources.
Menlo Institutional Perpetual Partners (MIPP) is expected to raise $1.2bn (€1bn) through two rounds of initial fundraising.
Menlo Equities declined to comment.
The fund will invest in offices, biotech buildings, data centres and light industrial assets in Silicon Valley, Seattle, Phoenix, Denver, Austin, North Carolina and the 128 Corridor outside Boston.
MIPP will be seeded with six properties, including three in Orange County, California, two in Silicon Valley and one in San Diego.
Menlo Equities has signed a contract with Threadmark as placement agent.
Over the first 12 months, Menlo’s fundraising target will be $300m to $400m, which is hoped to come from three to four large institutional investors each making commitments of $100m
A second round of capital raising is intended to occur over the subsequent 12 months, bringing in as much as $800m from smaller investors, with commitments of $50m or more.
The commingled fund has a core-plus investment strategy, and is targeting net returns of 9% to 10%, and is planning to use 40% leverage.
Menlo will be making a $30m co-investment.
The company joins other real estate managers launching their first perpetual life funds, such as Tristan Capital, as investors increasingly seek long-term exposure to property markets. Invesco Real Estate also structured one of its European hotels funds as an open-ended vehicle for the first time.
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