Lubert-Adler runs tender offer on RE co-investment fund

Limited partners in the firm's 2010-vintage $400m co-investment vehicle can approve an extension or sell to a secondaries buyer.

Lubert-Adler Real Estate Funds, which has $3.15 billion in assets under management, is running a tender offer on a 2010-vintage co-investment fund.

The manager is giving investors in the $400 million Lubert-Adler Real Estate Fund VI-B the option to approve an extension or “liquidate their remaining assets via a secondary sale”, according to documents from New Jersey State Investment Council’s September meeting.

Secondaries advisory firm Evercore has been hired to run an auction process, according to the documents, which stated a formal offer to investors was anticipated in late September or early October and investors would have 20 to 30 days to decide.

The vehicle has already used its two-year extension period and is set to terminate on 18 December, the documents noted.

Fund VI-B has achieved a since-inception net internal rate of return of 20.5 percent and a net multiple of 1.8x, according to New Jersey’s analysis. The pension concluded that an extension of three to five years may be necessary to fully liquidate the fund and that it sees “little upside” in extending.

“Participation in the secondary sale would facilitate an efficient exit and would avoid the payment of further fees and expenses over an indeterminate period of time,” it noted. “For this reason, the Division [of Investment] intends to pursue this secondary sale.”

Other investors in the fund include Ohio Public Employees Retirement System, according to data from sister publication PERE.

Fund VI-B was raised to give the $2 billion Lubert-Adler Real Estate Fund VI, which closed in 2007, more firepower to pursue distressed US deals, PERE reported. Fund VI-A, a $148 million co-investment vehicle, closed at the same time as the flagship vehicle.

In 2013 New Jersey sold $925 million of real estate stakes to non-listed investment trust NorthStar Realty Finance and a secondaries fund managed by Goldman Sachs Asset Management, Secondaries Investor reported.

Real estate accounted for 14 percent of the $58 billion in secondaries deal volume last year, according to Greenhill Cogent’s latest annual report.