UNITED STATES - Urdang Capital Management did not reach the expected initial capital raising for its latest commingled fund, the Urdang Value-Added Fund II.

The real estate manager had originally planned to raise between $500m (€318.4m) and $650m for the commingled fund but the actual amount raised felt short of that target at just $462.8m.

Urdang did have some soft commitments from some non-US pension funds, such as European and other international investors, so had they been met the total capital raised would be closer to the $650m figure, according to Richard Ferst chief operating officer at Urdang.

"These investors were turned off from investing in the United States by all the news of poor performance of the US economy. So we ended up not having any foreign capital in the commingled fund."

One of the US investors in the commingled fund was the Los Angeles Fire Police Pensions which has made a $50m commitment to the fund, as it is expected to achieve a net IRR of 13-155% over an average holding period of four to seven years.

The commingled fund has a seven-year life with two one-year extension options and invests properties across the four main sectors but which have management inefficiencies, recapitalisation potential or appear to have the opportunity to increase tenancy.

At least 15% of the fund could be invested in other property types, such as land held by "distressed", or distressed debt owners, but is looking, in particular, for transactions be completed with the assistance of local operating partners in markets with high projected population, employment and personal income growth.

Urdang has already completed around 25% of the deals, having invested $140m of equity transactions so far, although total capitalisation of these deals is around $400m.

Topics