Madison International’s Fund V Closes Oversubscribed at $825M

Madison International Realty got more than it had originally anticipated for Madison International Real Estate Liquidity Fund V L.P. It closed with $825 million of equity commitments, marking a notable sum above its $750 million target.

Madison International Realty got more than it had originally anticipated for Madison International Real Estate Liquidity Fund V L.P.  The investment vehicle, which centers on a Class A, direct secondary investment strategy in the U.S., U.K. and Western Europe, recently closed with $825 million of equity commitments, marking a notable sum above its $750 million target.

Madison representatives believe that it is the company’s unique investment strategy that has consistently attracted a growing group of participants.

“I think, frankly, any investment firm has an obligation to keep their investment strategy fresh and differentiated, and I think we’ve done that in a very significant way,” Ronald Dickerman, founder & president of Madison, told Commercial Property Executive.

The company focuses on acquiring stakes in premier properties and providing joint venture equity to existing sponsors who, instead of parting with their assets completely, endeavor to sell only a percentage of it.

“That strategy has served us well,” Dickerman added. “Everybody around the world wants to own interest in prime buildings but don’t want to necessarily bid against everybody else and pay the highest price.”

The roster of investor types in Fund V is long and diverse. U.S. public pension funds contributed, as did corporate pensions, insurance companies, endowments, foundations and family offices. And they came from all corners of the world. Participating institutional investors include European institutions, Middle Eastern sovereign wealth funds, as well as institutional investors in Asia and Australia. The global attention Fund V commanded was no accident.

Madison’s funds didn’t always reel in the international crowd. There were no foreign investors in Fund III, which closed in 2007 with $300 million. However, the tide turned when the fourth fund closed with $520 million and foreign-investor participation totaled 35 percent.

“At that point we purposely tried to create a broader footprint as it relates to our investor base; we thought broader diversification would be a good thing and create more stability for our firm,” Dickerman said. “The fifth fund was kind of a direct reflection of the continued globalization, and about 50 percent of those investors came from overseas.”

With 40 percent of its capital commitments having been deployed at this point, Fund V has already amassed quite a portfolio. Its investments include a 49 percent interest in the 1 million-square-foot One California Plaza in downtown Los Angeles; a stake in Songbird Estates Plc, which controls London’s Canary Wharf; and a 35 percent interest in the Statoil Office Complex in Oslo, Norway. And the list goes on.

With the ongoing success of Fund V, it’s likely that many investors’ thoughts are turning to Fund VI. Madison typically launches the funds at two-year intervals, so it’s possible that the next one will be introduced at the very beginning of 2015. But Madison is in no hurry.

“From our perspective, we hope investors will consider that fund at that time, but right now our focus is really the continued investing of Fund V,” Dickerman concluded.