Northwood Investors has closed its debut fund on $1.25 billion (€797 million) with plans to primarily target distressed real estate assets, debt and sellers in the US.
The Northwood Real Estate Partners I fund – the first venture from John Kukral following his departure from The Blackstone Group in 2005 – will also look overseas, according to Northwood chief operating officer Erwin Aulis.
The fund, split into a $750 million main fund and a $500 million sidecar, is unique in that it has adopted an “evergreen” structure whereby it can hold assets for up to 15 years and reinvest profits back into the vehicle. Investors can also reduce or increase their exposure to NREP after the first five years, with Northwood also able to raise a limited amount of additional capital for the fund.
“It is different from your typical private equity real estate fund,” Aulis told PERE. “It’s about not being forced to sell assets before you’ve realized their full value. We’re just taking a longer-term view of the real estate market.”
Kukral – who was named one of PERE magazine's 10 fund managers to watch in the June issue, was president of Blackstone Real Estate Advisors from 2002 to 2005, helping the firm close its fourth and fifth real estate vehicles on €600 million and $2.05 billion respectively. He also led the firm to acquire the Extended Stay America hotel group for $2 billion and the assumption of $1.13 billion in debt in 2004. The hotel group was sold three years later for $8 billion.
Investors to the fund included endowments, foundations, high-net-worth individuals and private pension funds as well as a Middle East institution.
Aulis, a former Transwestern Investment executive and president of O'Connor Capital, said the fund would target distress in the hospitality sector as well as “capital structures that are under stress,” including debt. The focus, he added, would primarily be on the US where a lot of distress was taking place, but would also have the ability to look overseas.