Dune RE Fund III Closes Oversubscribed at $960M

Cia Buckley Marakovits, Dune

Dune Real Estate Partners L.P. set an $850 million target for Dune Real Estate Fund III–an investment vehicle focused on distressed, deep value-add opportunities and contrarian investments predominantly in the U.S.–and not only did it hit the target, it surpassed it. Dune just completed the closing of Fund III with $960 million in capital commitments.

“Capital is increasingly available for the asset class from institutional investors but they are being highly selective and are focused on track record, governance and alignment of interests. Dune scored well on these items,” Cia Buckley Marakovits, Partner & CIO of Dune, told Commercial Property Executive.

Private fund placement agent Monument Group Inc. worked with Dune on Fund III, which attracted investors that had participated in the two predecessor funds as well as new contributors, and they ran the gamut of the institutional investment community. Participants included public and corporate pension funds, endowments, foundations and high-net-worth families. Dune professionals made a notable commitment as well.

Dune sites its differentiated strategy as the big draw for investors. “First, Dune focuses on larger, high-quality investments with each one being meaningful to the Fund’s performance,” Marakovits said. “Second, Dune’s very clear alignment of interest with its investors and its governance structure sets us apart. [This is a] sole line of business–not a platform, no outside shareholder, significant GP investment, sourcing done by 5 highly experienced partners.”

Dune is also distinguished by the fact that it is the only U.S. opportunity fund led or co-led by a woman.

Fund III, which was among the top five largest real estate funds launched in the third quarter of 2012 according to alternative assets industry analyst Preqin, has been quite active in the market already. Presently, the fund has $263.5 million of projected equity commitments in eight investments, including a multi-parcel land assemblage in Miami featuring 250 feet of fully entitled ocean frontage. The site, acquired through a foreclosure auction, will be developed into luxury condominiums. Fund III has also made an REO acquisition from the FDIC of fully leased condo-turned-rental buildings in Miami. And although Dune doesn’t generally acquire portfolios, Fund III has invested in an upscale retail portfolio in Los Angeles.

“We see tremendous opportunities ahead and look forward to putting Fund III to work,” Daniel Neidich, founder & CEO of Dune,” said in a prepared statement.