Morgan Stanley Investment Management’s private US real estate credit arm has raised $1.37bn (€1.3bn) for its fifth value-add fund.

Mesa West Capital said the amount raised for Mesa West Real Estate Income Fund V exceeded an original $1bn fundraising target for the fund. Fund V also exceeded the $900m raised for Mesa West Real Estate Income Fund IV at its close in 2017.

Mesa West said Fund V’s investors include a group of domestic and international public and private pension funds, insurance companies and individual investors.

IPE Real Assets previously reported that Los Angeles Water and Power Employees Retirement Board approved $100m to Fund VArkansas Teacher Retirement System also placed $40m into the fund.

Fund V will originate, purchase and manage loans secured by value-add/transitional commercial real estate assets throughout the US. The fund intends to create a diversified portfolio of “investments designed to produce current income and attractive risk-adjusted returns”, Mesa West said.

Jeff Friedman, principal of Mesa West, said: “In today’s environment, sophisticated investors are increasing their allocations to real estate credit with managers who have been tested through market cycles.

“Mesa West’s successful track record through multiple cycles, including through the global financial crisis, has been a differentiator for the platform in continuing to organically grow our business over time.”

John Klopp, global head of real assets for Morgan Stanley Investment Management, said: “The strong investor demand for this fund underscores our continued focus on providing best-in-class private and listed real assets solutions across multiple equity and credit strategies to meet our clients’ objectives.”

Klopp added that the capital raised for Fund V builds on the strength of the firm’s growing real assets platform, which currently manages $62bn in client assets.

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