PCCP anticipates a $1 billion final close on its opportunistic PCCP Equity Fund VIII sometime in June, PERE has learned.
The eighth real estate equity fund in the series, which was launched in February 2018, is expected to surpass the $750 million fundraising target and hit the $1 billion hard-cap. Through the fund, the Los Angeles-based investment manager will pursue an opportunistic investment strategy and target an 18-20 percent gross internal rate of return and 14-16 percent net levered IRR, according to a report from the City of Fresno Retirement Systems. The fund also attracted the attention of the Teacher Retirement System of Texas, which committed $150 million.
Fund VIII, like previous investment vehicles in the series, will target properties in the top-25 US markets. Investments will be made across the four major property types of office, industrial, multifamily and retail and will have a leverage limit of 65 percent, according to the report. PERE understands PCCP has already invested $250 million in Fund VIII.
PCCP’s last fund in the series, Fund VII, launched in February 2015 and closed in August 2016, according to PERE data. The fund raised $600 million after targeting $500 million and establishing a $750 million hard-cap. Fund VII was previously the firm’s largest opportunistic real estate equity fund and double the size of Fund VI, which closed on $296 million. At $1 billion, Fund VIII is expected to be nearly 70 percent larger than Fund VII.
The PCCP Equity Funds in aggregate were generating an estimated 25.4 percent gross IRR and 20.2 percent net IRR as of December 31, 2015, according to the CFRS presentation. Funds I and II were the only vehicles in the series that had been fully realized at the time and returned a gross IRR of 30 percent and 10.6 percent, respectively.
PCCP, also known as Pacific Coast Capital Partners, has been making equity and debt investments in commercial real estate since 1998. In equity, properties are repositioned through physical redevelopment, refinancing and improving lease-up. Its debt strategies include the origination of senior and mezzanine real estate loans ranging in size between $20 million and $300 million for office, industrial, multifamily, retail, hospitality and residential properties, as well as land. The firm has made more than $5.8 billion in equity investments and more than $12.2 billion in loan originations. PCCP holds $8.6 billion in assets under management.