Madison Realty Capital nears $1bn close for RE debt fund

The firm’s latest credit vehicle has already significantly outpaced its predecessor fund, which closed on $695m.

Madison Realty Capital is close to hitting its $1 billion target for its fourth real estate credit fund, according to Securities and Exchange Commission filings.

The New York-based firm has so far raised $935.25 million in equity for Madison Realty Capital Debt Fund IV through multiple interim closes. The fund held a first close in June 2017.

The vehicle will target an 11-14 percent net internal rate of return and a 1.4x-1.7x multiple on invested capital, according to documents from the Texas Municipal Retirement System. The US public pension has committed $100 million to the fund, according to data from our sister title, PDI.

The firm originates senior secured and mezzanine debt as well as preferred equity investments, which are used for the construction, acquisition and refinancing of commercial real estate, according to the company’s website. Madison Realty also acquires non-performing loans and preferred equity positions.

Madison Realty Capital Debt Fund IV, once fully closed, will be significantly bigger than its predecessor fund that raised $695 million in May 2016. Fund III received $150 million in commitment from the Oregon State Treasury and $50 million from the New Mexico Public Employees’ Retirement Association.

Real estate debt fundraising had been a bright spot in real estate fundraising in recent years, according to our sister publication PERE, but the total raised plummeted in 2018. It fell from $39.08 billion in 2017 to $20.39 billion.