REAL ESTATE - Hart Realty Advisers has begun the marketing process for its first commingled fund.
The Hart Realty Fund, L.P. is slated to grow to $100m (€81.5m).
It’s the first time in its 24-year history that the company has done this - previously it only invested for separate account clients.
Managing partner Dave Hart said: “One of our existing separate account clients said they would be a lead investor and we think there is a lot of interest in the commingled fund product now.”
There are very few separate account searches happening. The vast majority of the new capital being committed in the marketplace is through commingled funds.
This is happening as many of the top separate account managers have too much capital to invest from existing clients and are not interested in any new searches.
Hart expects it will be able to start investing the capital for the fund during the third quarter.
The new fund will have a value-added investment strategy. The fund manager will look for transactions for the fund that can produce 9% to 11% unleveraged IRR returns. This yield assumes a holding period lasting six to nine years.
Around 25% of the deals for the fund will involve investing equity in new development projects. This would mostly include apartments.
The commingled fund will also be buying some existing properties and taking some leasing risk. This could mean acquiring properties that would have a current occupancy level of 0% to 50%.
The Hart Realty Fund will look at investing all of the four majority property types of office, industrial, retail and apartments. The commingled fund would also consider pursuing some transactions with medical office buildings.
There are no assets in the commingled fund now. The portfolio manager on the fund is William Holmes, senior managing partner for Hart Realty. Investments will be looked at nationwide in the major metropolitan areas.