By Jon Peterson
Los Angeles-based CBRE Global Investors has completed a $1.34 billion capital raise for its latest commingled fund, CBRE Strategic Partners U.S. Value 8, and the manager has placed a portion of the capital into the marketplace.
One of its acquisitions was the $131.95 million purchase of the 394,123 square foot California Plaza office building in Walnut Creek. CBRE Investors had purchased this property from New York City-based Tishman Speyer in October of 2016.
U.S. Value 8 has now invested or committed 59 percent or $2 billion of the fund into 17 deals. These transactions included a mixture of office, multifamily, mixed-use and logistic assets. Some of the office acquisitions were completed in Dallas, Chicago and Pittsburgh, along with the asset in Walnut Creek.
The capital raised for U.S. Value 8 came from a mixture of investors in the United States, Europe, the Middle East and Asia. This includes $100 million from the California States Teachers Retirement System (CalSTRS), $200 million from Teacher Retirement System of Texas, $50 million from Kansas Public Employees Retirement System, $35 million from the Illinois Municipal Retirement Fund and $20 million from San Diego City Employees Retirement System.
The total capitalization of the fund is expected to be in the range of $3.3 billion. This will be achieved by having up to 60 percent leverage on the total projected portfolio cost. The targeted IRRs for the fund are 14 percent to 16 percent gross and 12 percent to 13.5 percent net. The co-investment made by CBRE Global Investors was 2 percent of total capital commitment, and it is not expected to exceed $30 million.
The commingled fund is planning to buy properties that can be acquired at below replacement cost on a nationwide basis. Its value-creation strategies will include investing in assets that are under-leased or under-managed where value maximization can be achieved through operational upgrades to the property. Target markets will include major U.S. metropolitan regions with solid supply/demand characteristics that are expected to drive above-average rent growth and total returns.