CRE Analyst Feb 24, 2024 10:00:00 AM

How Crow Holdings Raised $3.1B in a Challenging Market: 10 Key Strategies

How do you raise $3 billion right now? 10 suggestions from Crow Holdings' experience...

Crow Holdings just closed a $3.1 billion real estate fund despite a very challenging fundraising environment and a cloudy economic outlook.

According to this consultant's (Meketa) recommendation to a fund investor (Austin Fire Fighters Relief Fund), here's how Crow might say you can buck the trend...

1. Give yourself time

Crow surpassed its original target, but it takes time to raise $3+ billion. It looks like the final fund closing was two years after its first closing of capital.

2. Manage expectations

Crow is targeting 10-12% net returns. Crow seems to be generating value-add returns at the fund level by targeting a range of individual investments, from income-related acquisitions to developments. 

3. Don't worry about concerns about double promotes

Pensions and their advisors talk a lot about their distaste for being "double promoted," i.e., paying a manager a promote to pay a deal-specific sponsor a promote. Cutting out the "middle man" may have a nice ring, but managers like Crow seem to add value at scale. 

4. Charge reasonable fees

20% over a 9% with a 1.5% management fee. These aren't hedge fund fees, and, perhaps more importantly, the fee comes with a big and established team.

5. Have a great team

Crow’s real estate investment team is comprised of 102 professionals, including 13 investment committee members who have, on average, 26 years of real estate investment experience and 21 years at Crow. Crow has an experienced product leader for each property type in which Crow invests. 

6. Avoid office

Consistent with prior Crow Funds, this Fund expects to avoid office. 

7. Focus on industrial and multifamily

Crow intends to invest 70% of the Fund in industrial and multifamily. 

8. Allow for development

Want to juice returns in a high interest rate environment? Development is an easy answer, and Crow can put up to 40% of the Fund into development projects. 

9. Favor responsiveness over master plans

Crow's "tactical approach" to portfolio construction was the first strength listed in the advisor's recommendation.

10. Have a track record

This is the 10th fund in Crow's Fund series. Crow manages $22B and has acquired/developed $27B of real estate with an average gross IRR of 23% over 400 realizations.

Congrats to the Crow Holdings team on an incredible execution

 

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