You are here

Och-Ziff to seek US$2 billion for its biggest real estate fund

[WASHINGTON] Och-Ziff Capital Management Group LLC is seeking to raise its largest real estate fund ever after a period of change for the firm, including new leadership.

Billionaire Dan Och's hedge fund firm is targeting US$2 billion for its fourth fund focused on opportunistic property investments as soon as the end of the year, according to people familiar with the matter. New York-based Och-Ziff has also raised about US$750 million for a real estate debt strategy and is gathering a US$150 million affordable-housing investment pool, which would be exempt from taxes, said the people, who asked not to be identified because the information is private.

An Och-Ziff representative declined to comment.

The real estate group, under the leadership of Steve Orbuch, has been a relative bright spot for Och-Ziff, which has been trying to renew investor confidence two years after the firm settled a bribery probe with regulators. The firm's two most recent real estate funds produced net internal rates of return of 23.5 per cent and 21.8 per cent, respectively, from inception through June 30, according to a regulatory filing.

Market voices on:

Robert Shafir, the former executive at Credit Suisse Group AG who succeeded Och as chief executive officer in February, is overseeing a turnaround that's included shrinking or closing non-core businesses at the US$33 billion firm. Real estate is an area of potential growth, Mr Shafir told investors on a conference call last month.

"In the foreseeable future, we think we're extremely good in credit and in real estate," he said on the Aug 2 call. "What you will see is extensions that are logical adjacencies to those core businesses."

Och-Ziff is among investment firms that are readying real estate funds as the number of investors allocating giant checks to the space keeps increasing. Institutions such as public pension plans and insurance companies are betting big on property assets to protect against inflation and broaden their holdings beyond stocks and bonds.

Blackstone Group LP expects to raise US$18 billion for its biggest real estate fund ever, Bloomberg reported last week. In June, Blackstone raised US$7.1 billion for an opportunistic real estate fund focused on Asia, and Carlyle Group LP this month also raised its largest US real estate fund.