UNITED STATES - Rothschild Realty Managers has smashed its intended target for capital raising on its Five Arrows Realty Securities V commingled fund and collected $840m (€530m) through institional investors - $240m more than originally sought.
Officials at Rothschild Realty feel the commingled fund is now well-positioned in the marketplace to provide growth capital for real estate operating companies in the United States.
The real estate manager believes there is now a lack of capital in the market from public REITs and other sources of capital because the performance of the real estate markets in the United States will be considered questionable for the rest of this year and into 2009.
Rothschild Realty attracted a total of 25 investors in the commingled fund, the largest of which was the Teacher Retirement System of Texas as it made a total commitment of $225m - $150m will go into the fund directly along while another $75m is pledged for co-investment opportunities.
The real estate manager and Rothschild affiliate employees made a $15m co-investment into the unleveraged fund on a pari passu basis, and fund will target net annual returns of 12-15%.
Investments in real estate operating companies will be structured as either convertible preferred securities or convertible debt, and it is understood just about all of the investments in the commingled fund will be with companies based in the United States.
Rothschild Realty has made just one investment for the commingled fund so far. A $100m investment in T. Wall Properties was completed towards the end of last year as the company is involved in the ownership and development of office buildings in the Madison, Wisconsin area.
Rothschild Realty is now looking at several new transactions and is hoping to place $300m-$400m of capital into the marketplace by the year-end.