FCP Closes $1.2B Investment Fund

Unnamed property acquisition. Image courtesy of FCP

FCP has closed on seven investments so far for its latest fund that just closed at nearly $1.2 billion.

The company closed its FCP Realty Fund V L.P. after first opening it in February and executing a first close in April, Esko Korhonen, co-founder & managing partner at FCP, told Multi-Housing News.

Korhonen also told MHN that approximately 70 percent of the funds raised for Fund V came from existing investors, many of which increased their allocation. The remaining 30 percent came from new investors, Korhonen told MHN.

According to FCP, the fund will be used to target multifamily and commercial property opportunities throughout the U.S. When fully invested, Realty Fund V is expected to reach an approximately $4 billion total investment capacity. The company has already closed on seven investments in Texas, Georgia and New York with the latest fund.

The investments from Fund V started in May 2021, when FCP acquired a 380-unit in Smyrna, Ga., and formed a joint venture with S2 Capital to acquire a 308-unit community in Irving, Texas. In June, the fund invested in a 124,887-square-foot commercial development in Dallas and provided preferred equity to a 367-unit community in Glen Cove, N.Y.

The month of July saw FCP invest $24.5 million into the 247-unit Westwood Glen in Atlanta. In August, FCP also acquired a 375-unit community in Grand Prairie, Texas in a joint venture with VaultCap Partners, which was followed by the acquisition of the 260-unit Hawthorne at Sugarloaf in Lawrenceville, Ga.

Korhonen said in prepared remarks that the company will continue to focus on the moderate income, Class B and C sector of multifamily that has shown resilience with its cash flow throughout economic cycles.

Korhonen added in his prepared remarks that the rest of the fund will be used to invest into multifamily developments as well as value-add commercial office projects, particularly adaptive reuse and creative office projects. Korhonen also said in prepared remarks that FCP has a national reach but will focus on certain growth markets in the Southeast and Southwest U.S.

BUILDING ON PREVIOUS FUNDS

Westwood Glen. Image courtesy of FCP

Korhonen said in prepared remarks that the response to FCP’s latest fund was very strong and resulted in oversubscription in four months from first close to final close.

Compared to its previous two funds, Realty Fund V raised nearly the same amount as FCP’s third and fourth funds combined.

In November 2018, the company closed its Realty Fund IV at $755 million, which also targeted both multifamily and commercial properties but specifically in the eastern U.S. and Texas.

Several years earlier, FCP closed its Realty Fund III at $512.1 million, which was expected to generate roughly $1.7 billion in total investments when fully committed.