CrossHarbor Closes $865M Fund

Distressed properties will be one target of the firm’s largest vehicle to date.

Montgomery Village, an open-air retail center in Santa Rosa, California that was invested in as part of CIP 2021. Image courtesy of CrossHarbor Capital Partners

CrossHarbor Capital Partners has wrapped up the raising of $865 million in commitments for the CrossHarbor Institutional Partners Fund 2021, its tenth pooled opportunity investment vehicle. The fund is the fifth and largest of its Institutional Partners series, with the predecessor fund totaling $630 million.

Presently, CIP 2021 has $55 million in co-investment capital deployed across several investments as part of the fund. The closing follows the firm’s securing of $800 million for the fund in June of 2022, as reported by Institutional Real Estate Inc.

The closed-end investment vehicle, which consists of contributions from corporate and public pension plans, endowments, foundations, domestic and foreign financial institutions, sovereign entities and family offices, is being directed toward high-yield debt and equity investments in the industrial, multifamily, lifestyle retail, hospitality, student housing and senior housing sectors. The fund has a particular interest in distressed properties, as well as in those with negative liquidity, the firm said in a statement. Geographically, it is focused on assets in metros with strong economic fundamentals, substantial in-migration and employment bases, as well as increased household formations.

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As part of the investment strategy, CrossHarbor tapped Lord Green Services, an ESG-focused consulting firm, to analyze the sustainability of all the properties that have and will be invested in by the fund. The firm currently has $8.7 billion worth of assets under management.

CrossHarbor has recently been an active investor in the high-performance Phoenix industrial market, providing $73.3 million for Westcore Properties’ purchase of Hatcher Industrial Park, a 54-acre, 906,125-square-foot industrial campus located in the metro’s Loop 303 area. The financing was part of the firm’s Senior Debt Income Fund.

Institutional opportunities

At a time of stagnated lending amid a multi-decade high federal funds rate and inaccessibly high costs of capital, some institutional investors continue to search for opportunistic deals, particularly for multifamily and industrial assets, as well as value-add developments for Class B and C office spaces.

Earlier in August, Farallon Capital Management closed Farallon Real Estate Partners IV, which includes north of $650 million in aggregated investments. Same as CIP 2021, the fund has a focus on industrial, multifamily, office and retail assets.

In a June 2023 market survey conducted by DLA Piper, 53 percent of respondents identified industrial facilities, particularly logistics, warehousing and cold storage, as the most attractive investment opportunity. In the same survey, medical offices, life science, data centers, manufacturing and grocery-anchored shopping centers trailed multifamily. The top cities for investment were primarily located in the Sun Belt, with 39 percent of respondents listing Austin, Texas, as their most attractive option, ahead of Miami, Nashville, Tenn., and Raleigh-Durham, N.C.

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