Torchlight Investors has raised at least $414.1 million towards a $1 billion target for its Debt Opportunity Fund IV vehicle, according to a document filed Thursday with the US Securities and Exchange Commission. The filing does not signify an interim close.
The firm will hold a final close on the fund in the fourth quarter, a source with knowledge of the firm told Private Debt Investor.
Fund IV will invest in debt interests in commercial real estate, according to May documents from a Los Angeles City Employees' Retirement System meeting. The firm will invest in variety of securities, including CMBS, mezzanine debt, B-notes, preferred notes and financing for distressed mortgages.
“This approach gives diversification to the portfolio and allows flexibility should one area of focus become less attractive from a risk/return standpoint,” a LACERS memo says.
As an existing limited partner in Torchlight, LACERS secured a 25 basis point break on fees, resulting in a 1.25 percent management fee on committed capital. The fund also has a 9 percent preferred return with a 50/50 catch-up until the GP receives 20 percent of total distributions, with distributions being distributed on a 80 percent/20 percent split with LPs thereafter. LACERS approved a $25 million commitment to the fund, according to May meeting minutes.
“As of March 31, 2013, Fund II, a 2007 vintage year fund, and Fund III, a 2009 vintage year fund, had projected net equity multiple ranges of 1.00x – 1.10x and 1.80x – 1.95x, respectively,” according to LACERS.
The fund held a first close on $300 million in September 2012, according to a report from sister publication PERE. A US Securities and Exchange Commission filing lists chief executive officer Daniel Heflin and managing director Trevor Rozowsky as executive officers of the fund.
The Nebraska Investment Council approved a $20 million commitment to the vehicle in August.
Torchlight was founded in 1995. The firm has $3 billion in assets under management, according to its website. A loan services affiliate manages $3.1 billion in distressed commercial real estate loans.