UNITED STATES - Valencia Capital Management has raised $250m (€183.8m) for its commingled fund, Next Block Medical Fund I, through strong support from pension funds.
Lead investor in the commingled fund is California Public Employees Retirement System as it made a $100m commitment in the fund while the last pension fund to go into the commingled fund was the Los Angeles City Employees’ Retirement System with a $10m commitment, according to Daniel Gallagher, chief investment officer at the pension fund.
"Demographics of the ageing population increase the need for services near urban medical centers so we think that a fund like this makes sense," said Gallagher.
Next Block Medical Fund I has a niche investment strategy to develop office, retail, mixed-use and for-sale or for-rent housing located close to urban medical centers across the United States.
The fund already has two pre-specified assets with a gross investment value of $100m, one of which is located in the Southwest.
Total capitalization of the commingled fund is $700m through 65% leverage while investors in the commingled fund are projected to achieve a net IRR in the range of 15% to 18%.
Valencia Capital has made a $12.5m co-investment into the commingled fund through a loan from Hunt Realty Group, which owns 50% of the real estate manager. Four principals, including founder Michael Romo, own the other 50% of Valencia Capital.