Clarion Partners is seeking to raise $1bn (€857.5m) as seed capital for its newly launched Clarion Alternative Sectors Fund, according to board documents filed by San Diego City Employees’ Retirement System.
The pension fund has approved a $35m commitment into the commingled fund.
Clarion does not comment on capital raises that are still open for new commitments from limited parters. However, the Sandiago City documents revealed that the fund manager will offer seed investors discounted asset management fees in perpetuity.
The new commingled fund has a core-plus strategy with an open-ended investment structure with an initial two-year lockup for seed investors.
Clarion is expecting the seed phase of the fund raising to run for 18 to 24 months, targeting near-term opportunities in select alternative sectors including senior housing, industrial outdoor storage (IOS) and build-to-rent (BTR) single-family housing. Annual deployment is set to be $400m for both BTR and senior housing, and $200m for IOS.
The mature phase of the US-focused fund will expand into a broader array of alternative housing sectors, healthcare, and industrial/storage assets as the fund scales.
The Clarion’s Alternative Sectors Fund has a targeted net IRR of 9% to 10.5% with leverage planned to be in the range of 35% to 45%.
New development is projected to make up 15% to 20% of the fund.
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