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CenterSquare Investment Management's Fund IV Results

CenterSquare Investment Management has recently reported remarkable results for its fourth value-added private real estate fund, the CenterSquare Value-Added Fund IV, L.P. This fund has showcased performance that aligns with its ambitious target range of 13-15%, exhibiting resilience similar to that of its predecessor, the Value-Added Fund III.

Strategic Approach to Investments

The success of Fund IV can be attributed to CenterSquare’s meticulous approach, which includes data-driven portfolio construction, a disciplined investment methodology, and robust risk management practices. Jeffrey Reder, Managing Director for CenterSquare's Private Equity Real Estate Vertical, emphasized that the successful, full realization of the Fund within five years of portfolio construction underscores their ability to pinpoint assets ripe for immediate value enhancement. Reder attributes this success to the firm’s thematic strategy in selecting sectors fueled by strong, sustainable trends, allowing them to identify the most promising property opportunities within those domains.

In 2019, over 70% of the investments for Fund IV were completed, with a considerable focus on multifamily and industrial sectors. CenterSquare managed to source approximately 85% of these transactions off-market, showcasing their proactive sourcing strategies and deep industry connections. The Fund's leverage was kept at a prudent level of 45%, indicating a commitment to generating returns through effective business plans rather than financial engineering.

Navigating Market Volatility

Despite committing a significant 94% of the capital raised, the firm decided to pause new investment activities following the onset of the COVID-19 pandemic. This strategic pause was a preventive measure taken by the Portfolio Managers, who recognized potential adverse impacts COVID-19 could have on existing assets. By maintaining reserves, CenterSquare aimed to safeguard current investments while the real estate market's future remained uncertain.

CenterSquare's positioning as both a public and private real estate manager has facilitated continuous collaboration among investment professionals, leading to the dissemination of insights across the full spectrum of the real estate landscape. Such a comprehensive view enhances the Value-Add Funds portfolio management team’s ability to refine acquisition strategies and execute timely exit decisions based on shifting market dynamics.

Acknowledging Resilience and Success

CEO and CIO Todd Briddell expressed pride in the outcomes delivered to clients, particularly during the tumultuous times marked by the COVID-19 crisis and unprecedented interest rate fluctuations. He indicated that even amidst volatility, CenterSquare remained steadfast in focusing on the fundamental elements of their investment framework, ultimately creating significant value for investors.

About CenterSquare Investment Management

Founded in 1987, CenterSquare Investment Management operates as an independent, employee-owned manager specializing in real assets, encompassing listed real estate, private equity real estate, and private real estate debt. Their fiduciary duty is rooted in aligning their interests with those of clients, partners, and employees. Headquartered in suburban Philadelphia, with additional offices in New York, Los Angeles, London, and Singapore, CenterSquare manages over $13 billion in assets as of December 2024, serving a diverse clientele that includes some of the most recognized institutional and private investors globally. More information can be found at www.centersquare.com.