Fundraising

Praedium closes $700m fund

The New York-based private equity real estate firm, which targets under-performing properties, has closed its sixth fund on $700 million.

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New York- based private equity real estate firm The Praedium Group has closed its sixth fund on $700 million (€572 million). The firm had initiated its fundraising effort with a target of $500 million.

Praedium Fund VI will concentrate on middle-market properties throughout the United States and Canada that “can be enhanced through focused or creative leasing, management or repositioning,” noted Russell Appel, president of The Praedium Group, in a statement. The firm primarily focuses on assets that are under-performing their peers in the marketplace across property types, typically with an enterprise value between $10 million and $70 million.

Russell Appel, founder, The Praedium Group

Praedium’s sixth fund included 36 institutional investors, 90 percent of which had previously invested in Praedium Fund V, which closed on $465 million in 2001. The current fund has already invested in six properties, including the firm’s most recent acquisition, a $55 million office property in Hillsboro, Oregon. Praedium has also purchased two residential portfolios in the greater New York City area, as well as a residential property in Simi Valley, California; two office buildings in San Jose, California; and a multi-family complex in Orlando, Florida.

The strength of Praedium’s fundraising effort partially reflects investor appetite for real-estate focused funds. Earlier this month, The Carlyle Group closed a $410 million fund focused on Asia properties and a $950 million North American fund. In May, Goldman Sachs raised $3.2 billion for their latest Whitehall fund, the investment bank’s primary real estate investing arm. Other bulge-bracket investment banks, such as Morgan Stanley and Credit Suisse First Boston are also in the process of raising funds in excess of $1 billion.

Praedium itself started as a captive arm of CSFB in 1991. The firm became independent five years ago and has invested in more than $4 billion of real estate investments over the past 14 years. CDP Capital-Real Estate Advisory, an affiliate of Caisse de depot et placement de Quebec, is a major shareholder of The Praedium Group.