US - Buchanan Street Partners has completed its equity raise for its latest commingled fund and attracted total commitments of $414m ($304.9m euros) to the Buchanan Fund V.
Buchanan had originally intended to raise somewhere in the neighborhood of $300m to $350m but the commingled fund was oversubscribed, said Chris MacDonald, founder and executive vice-president at Buchanan.
It is a situation now commonplace with many commingled fund managers, as real estate remains high on the wish list for many institutional investors.
"The main selling point for our fund is that we focus on mid-cap size of transactions. This means that we invest equity of $5m to $15m in each transaction and the total size of the deal is $20m to $50m. These are transactions that most pension funds and other institutional investors would never do own their own. Our fund gives them a chance to participate in these kinds of deals."
Buchanan attracted a wide range of investors to Fund V, from pension funds, life companies, banks and high net-worth individuals along with a $30m commitment was the Los Angeles City Employees’ Retirement System and Buchanan’s own $10m co-investment to the commingled fund.
Projected returns for investors in the fund are a 12% to 15% net IRR, on a two- to five-year holding period.
The life of the fund lasts for seven years and Buchanan has three years to find all of the deals for the fund, using leverage of 70% of stabilized value.
Its investment strategy for Fund V is to seek four property types - office, industrial, retail and apartment - across the United States, so Buchanan will be working with local operating partners to find value-added potential in repositioning, redevelopment, development and releasing.
Investments will be structured as mezzanine, hybrid debt and straight equity.
A good portion of the deals for the fund have already been made as Buchanan has already committed $133.5m to properties with total project costs of more than $500m in California, Nevada, New Mexico, Colorado, Texas, Missouri, North Carolina and Florida.