Farallon Capital Management LLC, a global investment firm, is launching a new real estate fund seeking to raise up to $400 million. The launch comes on the heels of TPG Capital's initiation of its first real estate fund with a $1 billion target.
Farallon has set aside a separate fund exclusively for its assets and hopes to pitch the fund to its existing investors to gain a 20 percent internal rate of return.
Apparently, the fund will have a three-year investing period from closing and will last for eight years. It will have buying power worth $1 billion, after setting aside money for various reserves and leverages. The real estate fund will allow its investors to allocate capital into more liquid assets and help earn better profits, reports Reuters.
Farallon Capital is the twelfth largest hedge fund in the world. It manages assets worth $20 billion on behalf of its clients. However, the real estate fund launch is not its first foray into the housing market.
In 2007, Farallon had acquired a real estate investment trust (REIT), Mills Corp. in partnership with Simon Property Group Inc. However, Farallon sold its stake in the company to Simon Properties in 2012.
More recently, Farallon founder, Thomas F. Steyer, stepped down from his post of co-managing partner. The New York Times reported that the 55-year-old businessman would have no responsibilities towards Farallon once he steps down and his partners would buy out his interest in his profit share of the hedge fund.
"The announcement is the natural next step, is accepted internally and won't change our mode of operation. The playbook won't change when I leave," Steyer wrote in a letter to his investors.