Real Estate Alert
Coventry Real Estate Partners is raising $300 million of equity for an opportunity fund that will invest in value-added shopping centers. The vehicle will be the second fund operated by Coventry, which was formed in 1998 out of a joint venture between Prudential Real Estate Investors and Developers Diversified Realty. In 2000, Coventry formed a $280 million fund, but all of the equity was supplied by Developers and five separate accounts managed by Prudential.
This time, the bulk of the capital will come from outside investors, including pension funds, endowments and other institutional investors, as well as some high-net-worth individuals. Coventry is shooting for an initial equity closing by yearend. Developers, a shopping-center REIT based in Beachwood, Ohio, will kick in $50 million of the total.
The first fund, Coventry Real Estate Fund I, is fully invested and is expected to produce average annual leveraged returns of 27% after fees. It targeted development projects, big-box retail sites that were vacant because of bankruptcies and obsolete malls suitable for repositioning. Some of those plays were executed so quickly that the properties are already back on the market. Coventry plans to seek the same kind of opportunities for its second fund, which will target an 18% return. Coventry also serves as an advisor to retail firms seeking to dispose of properties. Last year, for example, it advised Burnham Pacific Properties on its liquidation of a big portfolio.
SOURCE: Real Estate Alert 5/22/2002