Covenant Capital Raises $600M Apartment Fund

The largest vehicle in the firm’s history will be used to acquire as many as 50 value-add properties over the next several years.
Seven Lakes at Carrollwood. Image courtesy of Covenant Capital Group

Covenant Capital Group has closed Covenant Apartment Fund X LP, raising $600 million to make it the largest fund in the firm’s 20-year history. The real estate investment management company said the fund will enable it to invest more than $1.7 billion, including debt, into approximately 40 to 50 value-add multifamily assets over the next three years.

Covenant began raising Fund X in 2020 and significantly surpassed the fund’s $400 million target. Fund X capital commitments also exceeded Covenant’s prior fund, Covenant Apartment Fund IX LP, by more than 50 percent. Covenant closed Fund IX in 2018 with $395 million of committed capital.

Covenant said Fund X received commitments from more than 300 limited partners, with more than 93 percent of the investors having committed to previous funds. Since 2001, Covenant has raised more than $2 billion of capital to invest in apartment communities.

Govan White, Covenant managing partner & co-founder, said in a prepared statement the ability to raise its largest fund during the pandemic speaks to the confidence the limited partners have in the firm’s ability to perform. He said the firm’s value creation efforts have enabled the company to acquire and reposition more than 225 apartment communities with an aggregate value of more than $4.1 billion. The firm was founded in 2001 by White and Richard Scarola.

Fund X Deployments

Fund X has already closed on 13 assets with more than $600 million in total capitalization. The fund has acquired three multifamily communities in Tampa, Fla., totaling 1,755 units. Other properties are located in: Jacksonville, Fla., (two assets totaling 765 units); Port St. Lucie, Fla., (one asset with 230 units); Atlanta (one asset with 416 units); Augusta, Ga., (two assets with 418 units); Knoxville, Tenn., (one asset with 350 units); San Antonio, Texas, (one asset with 248 units); Bowling Green, Ky., (one asset with 390 units); and Indianapolis (one asset with 314 units).

 “We focus on the Mid-Atlantic, Southeastern and Southwestern markets. Our target markets are primarily 26 cities across the Sun Belt from Northern Virginia to Florida and Texas and up into Indiana,” White told Multi-Housing News. “We will attempt to identify apartment communities in well-located, supply constrained markets. We plan to upgrade existing apartment communities to an institutional quality product most desirable to today’s renters while reducing the environmental impact.”