By Jon Peterson
Charlotte, N.C.-based Asana Partners is planning a $1 billion capital raise for its Asana Partners Fund III, according to information provided for the board meeting document for the New Mexico State Investment Council.
The real estate fund manager will be considering investments in 28 targeted MSAs across the country. Its existing portfolio includes investments across all the major West Cost markets like San Francisco, Los Angeles, San Diego, Seattle and Portland. The new fund will also add San Jose and Silicon Valley as an area of focus.
Asana has a regional office in Los Angeles through which it sources its transactions on the West Coast.
All of the capital for the commingled fund will be invested in retail properties. This would represent one of a limited number of commingled funds in the United States that is investing only in retail assets and trying to raise capital from pension funds and other institutional investors.
This retail strategy will be focused on niche retail assets, which would include street retail properties in high-growth, dense urban/infill neighborhoods with favorable supply/demand characteristics. Most of them would be located in walkable neighborhoods with collections of small format spaces for boutique retail, showcase, service businesses and restaurants.
The transactions made by Fund III would be considered value-add investments. These would involve properties that could produce a low double-digit net return. The amount of leverage planned for the fund is 60 percent, according to New Mexico.
Asana is planning to focus on two types of assets. Most of them would be older properties with an average age of at least 20 years, and in some cases they will even consider historic buildings. The ideal investment would be a property of around 25,000 square feet with the majority of the space dedicated to retail and often accompanied by a varying percentage of creative office space available for retail level rents. Some assets in the fund could also include neighborhood centers that are anchored by specialty grocery tenants.
Asana is also planning to invest in properties where a portion of the net operating income growth would come through the lease-up of the property. The primary drivers of the growth would be rental rate increases obtainable from repositioning and operating efficiencies. Re-merchandising, lease quality and assemblage drives the potential exit valuations. Generic modeling assumes operating distributions to contribute close to 30 percent of the return generated over the holding period.