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Investors' appetite for unusual strategies meant to capture profits from real estate investments remains strong amid rising inflation and market turbulence.

Clairmont Capital Group, a Los Angeles-based real estate PE firm, is looking to capitalize on this interest. The asset manager is seeking to raise $150 million for its fourth GP co-investment fund, according to Macklin Turnrose, the director of investor relations at the firm.

Clairmont has already held a first close of the fund on $110 million, Turnrose said, adding that the vehicle is expected to top its target and reach its hard cap of $200 million. Clairmont is hoping to raise money from LPs including institutionalized RIAs, family offices, smaller pension funds and insurers, as well as high net worth individuals.

One of the fund's anchor investors, which committed $50 million to the vehicle, is an institutional RIA that manages about $20 billion in assets.

The new vehicle targets GP co-investment—rather than the traditional real estate JV equity investment—and funds the capital a general partner is required to contribute in JV real estate transactions. In exchange, the fund earns a percentage of promote distributions—the share of investment profits that a GP pockets after LPs get their profits. In the non-real estate world, a promote is known as carried interest.

Here is one example of how this GP co-investment mechanism works.

Assume there is a $200 million real estate development project, which is capitalized by 60% of debt ($120 million) and 40% of equity investments ($80 million). In a GP/LP JV deal, the LPs will usually put up the majority portion of the equity investments, say 90%, leaving the GP on the hook for the remaining 10%.

A GP co-investment fund will contribute part of that 10% in exchange for a portion of the promote, allowing the GP to free up its capital for more deals and to scale its operation, rather than heavily investing in each transaction.

Other firms that manage similar funds include real estate investors DVO Real Estate and Accord Group Holdings, according to PitchBook data.

Clairmont's Fund IV will build a portfolio of 60 to 75 assets, with investments of $3 million to $5 million per deal, Turnrose said. It will focus on the US market, targeting real estate assets such as multifamily and single-family rental properties, student housing and industrial logistics. The firm has a pipeline of deals worth $150 million and is aiming to deploy its capital in the next 24 months, sooner than the fund's investment period of 36 months.

Clairmont's GP partnerships include CA Ventures, The Habitat Company and The Preiss Company, according to marketing documents seen by PitchBook.

Real estate assets tend to attract investors especially during times of inflation, as the asset class is considered by many to be an inflation hedge. KKR and GreenPoint Partners are recent investors reportedly marketing new vehicles that target real estate bets.

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This article originally appeared on PitchBook News