Fundraising - MARCH 4, 2014

Dune raises $359m for third real estate fund

by Andrea Waitrovich

Dune Real Estate Partners has raised $359 million for its third real estate fund, Dune Real Estate Fund III, according to a filing with the SEC. The opportunistic fund launched in 2012 with an equity target of $850 million.With leverage, the fund could have more than $1.3 billion of buying power.

DREF III continues the opportunistic investment approach applied within the two predecessor funds to selectively acquire, manage and sell real estate assets that are mispriced or underperforming. Through DREF III, Dune is targeting distressed commercial and residential real estate as well as nonperforming loans and debt throughout the United States. The vehicle may selectively make investments in the European Union.

Dune anticipates that DREF III will comprise 15 to 25 investments with individual equity investments ranging from $25 million to $100 million and overall assets and portfolios ranging from $50 million to $300 million in size.

Dune has made 10 distressed investments across DREF I and DREF II as of May 2013. These investments represent $395.5 million of invested equity.The distressed investment strategy in Fund II is more closely reflective of the one anticipated for Fund III.

DREF I’s distressed investments were made in 2006 and involved the acquisition of an interest in the since-bankrupt Capmark Financial Group and an interest in Meadowlands Xanadu, a large-scale mixed-use development that ultimately stalled alongside the Lehman Bros. bankruptcy. Fund II made eight distressed debt investments representing $253.7 million. Examples of distressed debt investments include The Mark Hotel and Residences, Red Roof Inn and Atlantic Yards.

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