Alterra Property Group is seeking to raise $750m (€686.4m) for its latest US industrial outdoor storage (IOS) fund, according to an investor’s meeting document.
Ventura County Employees’ Retirement Association (VCERA) disclosed in the meeting document that it approved a $35m commitment to IOS Venture III, a fund which targets IOS properties used for services like storage, truck parking, equipment repair, container yards and building materials.
Venture III, which is expected to have a first close in May, has an $850m hard cap target. Alterra raised $524m for Venture II, the previous fund which closed in March last year.
The fund is expected to generate 30% to 40% of its total returns through current cash flow or cash yields of 6% to 7% annually.
Venture III seeks transactions that can deliver net internal rate of returns in the range of 14% to 16% and a 1.7x to 1.8x net multiple on invested capital.
According to VCERA’s real estate investment consultant, NEPC, the IOS sector is underserved by institutional capital due to the highly fragmented ownership and transaction sizes typically between $5m to $15m.
The IOS market is around 95% privately owned, with no single owner holding more than 1% to 2% of the market.
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