San Francisco-based asset management firm Farallon Capital Management has closed its debut real estate fund on $375 million in equity. Farallon Real Estate Partners (FREP), which held a first close on $153 million in August, brought in commitments from endowments, foundations, family offices and corporate pension plans, as well as a significant co-investment from the firm.
FREP operates on an opportunistic strategy, targeting office, industrial, apartment and retail assets as well as distress throughout the US. Farallon will focus on buying in the suburbs of cities with significant job growth and higher barriers to entry.
“Raising dedicated commitments allows us to pursue an investment program tailored to this strategy, fulfilling a targeted investor mandate,” said Andrew Spokes, managing partner at Farallon, in a statement. “The current commercial real estate market plays to the strengths of our US real estate team, and we are looking forward to investing these new commitments for our partners.”
FREP plans to differentiate itself by making smaller deals. The fund will write equity checks in the range of $10 million to $30 million, according to a source familiar with the situation. Thus far, FREP has invested approximately 5 percent of its capital.
“Some of these investments are burdened with complicated and broken balance sheets, but we believe this is where we will be able to differentiate ourselves through our research, skills and experience,” added Dan Hirsch, managing member at Farallon, in a statement.
Farallon has been investing in real estate for more than 20 years, during which time it has allocated more than $3.2 billion of capital to more than 130 transactions backed by income-producing properties. A source close to the situation noted that many of Farallon’s commitments came from investors that had prior relationships with the firm, which is one of the largest hedge funds in the world.