TriGate Seeks Capital for Second Fund

TriGate Capital is seeking to raise $300 million of equity from institutional investors for its first comingled fund, which would invest in distressed debt and foreclosed properties.

The value-added fund would follow up the Dallas operator’s first investment vehicle – a discretionary fund it set up in 2008 with California State Teachers as anchor investor.  CalSTRS kicked in $110 million of equity, while TriGate supplied $10 million.

TriGate, which was formed in 2007, originally planned to use CalSTRS’ commitment as seed money for a $350 million commingled fund.  But the market crash stymied its efforts to raise additional capital, and the two players agreed to proceed with the joint venture, called TriGate Property Partners.

With that capital nearly fully invested, TriGate is trying its hand again at a commingled fund, which would be called TriGate Property Partners II, L.P.  CalSTRS is expected to pledge $50 million.  An initial close would come as early as midyear.  Park Madison Partners is the placement agent.

The fund would shoot for a roughly 15% return by investing nationwide, with a focus on the retail, office and industrial sectors, including flex space.  It would buy or recapitalize properties, as well as acquire distressed debt with an eye toward taking over the collateral.  With leverage, the vehicle could have $1 billion of buying power.

TriGate was founded by three real estate veterans: former Morgan Stanley Real Estate executive Jay Henry; Jon Pettee, who previously ran a joint venture operated by Fortress Investment and Goldman Sachs; and former ORIX Capital Markets president Jeff Yarckin.

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