Brockton Capital is expected to limit its latest fundraising at £850m (€1.17bn), making its third real estate fund bigger than the two predecessors combined.
According to the San Francisco Employees’ Retirement System (SFERS), Brockton Capital Fund III has already gained £628m of committed capital. A SFERS board meeting document shows Brockton has indications of interest that would take the fund beyond its ‘hard cap’ of £850m.
Brockton Capital will close another round of fundraising this month before closing a final round in February. The real assets team at SFERS is planning to approve its £40m commitment before the end of the year to avoid the possibility of having to reduce the size of the commitment in the face of strong investor demand.
The investment would continue the pension fund’s recent focus on European real estate strategies. Last month, SFERS approved a €100m commitment to Blackstone Real Estate Partners Europe V.
The pension fund also revealed that Brockton Capital will eventually co-invest 2% of total capital raised. It will make a 1% co-investment at the final closing. This will be increased to 2% once all investments by its previous fund have been realised.
Brockton Capital Fund II raised £496m in 2010, four years after Brockton’s debut fund secured £135m.
Brockton Capital focuses on UK real estate that requires intensive asset management. According to SFERS, the latest fund is targeting net returns of 15% and is applying levarage of up to 60%.
Fund III has invested so far in London office buildings and light industrial assets across the country. Cambridge Associates, advisers to SFERS, said the fund had made five investments totalling £331m. The fund may also target retail and residential investments.