UNITED STATES - MacFarlane Partners has raised $1bn (€683.6m) for Urban Real Estate Fund II, making this one of the largest urban commingled funds ever to be created in the United States.
Pension funds were a major source of the capital for the firm as California State Teachers Retirement System (CalSTRS) allocated $300m as a lead investor, alongside investments from State of Connecticut, New Jersey Division of Investment, Teacher Retirement System of Texas and Illinois State Board of Investment.
A unique feature of the fund this time around is all capital has already been committed to transactions prior to the fund closing, whereas most US commingled funds tend to be partially-specified or act as blind pools.
Officials argue pension funds should therefore see their capital put to work in a timely fashion, to generate the projected net IRR of 16-18%.
One of the biggest transactions the commingled fund has invested in is the JBG Urban joint venture created earlier this year, which is redeveloping and developing ‘institutional-quality' properties in the greater Washington DC market. Value of the properties will be $10bn once they are completed and have reached stabilization.
Urban Real Estate Fund II has also committed to transactions in other markets like Northern and Southern California as the overall strategy of the fund is to make investments in urban and high density suburban projects around the country with growth features and amenities.
Leverage placed on the commingled fund will be up to 75%.