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Harbert raises $247m for fifth energy fund

by Andrea Waitrovich

Harbert Management Corp. has raised $246.7 million for its fifth fund, Harbert Power Fund V, according to a filing with the SEC.

HPF V has a $500 million fundraising goal. The California Public Employees’ Retirement System invested $100 million in October 2013 as part of its infrastructure plan. The fund was formed to invest in independent (non-utility) power generation and related power assets in North America.

The firm held a second closing in August 2013 with more than $200 million. A final close was anticipated in 2013; however, the firm didn’t make an official announcement and the filing did not disclose the date of a final close.

The firm is also raising equity for its fund Gulf Pacific Power, which has a similar strategy as HPF V. The two funds are complementary — GPP will target power assets requiring larger equity investment than HPF V, and HPF V and its investors will have the opportunity to co‐invest in investments made by GPP.

GPP is backed by approximately $600 million in commitments from CalPERS and HMC affiliates.

In October 2013, GPP acquired an ownership interest of approximately 33 percent in the Astoria Energy II power plant in New York City. Astoria Energy II is a 550-megawatt combined cycle power plant that sells its entire output to the New York Power Authority under a long-term contract that runs to 2031.

In other news, Harbert’s real estate business has raised $185 million for its Harbert United States Real Estate Fund V, as of Dec. 6, 2013. The fund is targeting $300 million in commitments and is scheduled to hold its final close in June 2014.

HUSREF V is committing its equity and made its first investment in December 2012. The fund has invested $70 million across eight investments, creating a geographically diverse portfolio of multifamily and office assets as of Feb. 6.

In January, HUSREF V, in conjunction with The Simpson Organization, acquired 730 Midtown, a 213,000-square-foot, 11-story class B office building in Atlanta. TSO and HUSREF V closed on the office property on Jan. 10 and intend to invest an additional $2.6 million upgrading and leasing vacant space at the property.

The fund’s predecessor, HUSREF IV, and its partner Cypress Office Properties recently sold La Terraza Corporate Plaza, a 78,477-square-foot, three-story, class-A office building in Escondido, Calif. The buyer, Peregrine Realty Partners, paid $22.3 million. HUSREF IV and Cypress purchased the property for $13.1 million in a distressed REO sale in October 2011.

HUSREF IV, which closed in 2011 with $134.2 million committed equity, ended 2013 by selling a large portfolio of self-storage assets it had acquired with W. P. Carey. The portfolio consists of 20 self-storage facilities totaling 1.4 million square feet and 12,561 units. HUSREF IV and W. P. Carey formed a joint venture in 2009 to acquire a portfolio of unstable properties in one-off or in small portfolios, stabilize them, and sell to a strategic buyer.

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