Town Lane, the New York-based boutique real estate manager founded by former Blackstone executive Tyler Henritze, has completed the capital raise for its inaugural fund, Town Lane Real Estate Opportunities Fund I, PERE has learned.
The firm held a final close for the fund at its $1.25 billion hard-cap on Thursday, exceeding its $1 billion target. PERE understands that Town Lane began reaching out to investors nine months ago and held a first close in March on $700 million. The firm then held a second close in April on $450 million to $475 million and a third and final close on $100 million this week. Limited partners include a mix of university endowments, charitable foundations, family offices and pension funds.
The vehicle’s fundraising period of less than a year is considerably shorter than most other funds closed in 2024. At a time when fundraising activity remains at a decade-long low, the average time in market for a private real estate fund has climbed from 13 months for funds closed in 2018 to 22 months for funds closed in 2024 year-to-date, according to PERE data. Henritze, who is the firm’s managing partner, and Parker Morse, co-founder and chief operating officer, handled the fundraise without the help of an investor relations team or a placement agent.
“We were humbled by the interest we received from investors, especially the caliber of institutions we are partnering with,” said Henritze. “I think our fundraising efforts benefited from a focus on alignment and partnership, along with the good fortune of launching without any legacy assets. We are excited about closing our fundraising efforts, but now the real work begins to thoughtfully invest our partners’ capital in a dynamic and competitive investment environment.”
Added Morse: “The barriers to entry for first-time funds remain high, especially in the current fundraising environment, and we have a deep sense of responsibility given the trust our partners have placed in Town Lane. We are very excited about the team we have built to date and the opportunity set ahead of us.”
The opportunistic vehicle has a fairly flexible US-focused mandate that allows the firm to invest across different sectors and throughout the capital stack. Targeted sectors include industrial, multifamily, hospitality and data centers. The early focus of the vehicle will be on the eastern half of the US and Sun Belt markets. While Town Lane has the flexibility to invest in high-yielding credit, its primary focus will be on control-oriented equity opportunities.
The firm has so far invested less than 5 percent of the fund’s capital and will aim to deliver mid-teens net returns for the vehicle.
Before starting Town Lane last year, Henritze spent nearly two decades at New York-based mega manager Blackstone, most recently as the head of strategic investments and head of acquisitions for its real estate Americas business. One of the firm’s most prolific real estate dealmakers, he was involved in over $100 billion of real estate investments across all sectors during his career at Blackstone.
He was a driving force behind some of Blackstone’s highest-profile deals in the US, including the $10 billion privatization of data center giant QTS Realty Trust in August 2021; the $7.6 billion take-private of industrial real estate company Gramercy Property Trust in October 2018; the $6 billion purchase of hotel chain Extended Stay America with Starwood Capital Group in June 2021; and the $5.65 billion sale of the Cosmopolitan of Vegas in May 2022, as well as the original $1.7 billion purchase of the hotel casino resort in December 2014.
Morse, who is also Henritze’s sister, previously was a senior investment professional at New York-based private equity firm Sycamore Partners, where she helped build the firm from less than $1 billion at its founding to approximately $10 billion in AUM during her 11-year tenure.
To date, the firm has recruited a dozen professionals from firms such as Starwood Capital Group, Goldman Sachs and Evercore, and is expected to reach a headcount of 15 by year-end.
Law firm Kirkland & Ellis advised Town Lane on the fundraise.
Henritze is not the only former Blackstone executive to have launched his own firm and debut real estate fund in the past year. Former global co-head of real estate Chad Pike established a real estate investment management business called Makarora last year and is currently in market with Makarora Real Estate Special Situations Fund, which has a target size of $1.5 billion.
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