By Jon Peterson
San Francisco-based DivcoWest Properties has received two new commitments totaling $450 million for its latest commingled fund, DivcoWest Fund V. One of these commitments was for $250 million from the Oregon Public Employees Retirement Fund, according to a board meeting document from the pension fund. The other $200 million allocation came from the Teacher Retirement System of Texas, as stated in an e-mail from the investor.
A company representative of DivcoWest declined to comment when contacted for this story. According to a public document, the real estate manager did have a first closing in April for the commingled fund with a capital raise just over $1 billion. The planned total raise for the commingled fund is projected to be $1.5 billion. There is a good chance that a final close on the fund will happen sometime in 2016.[contextly_sidebar id=”vSg1nwcJMzjWf6pgTN3Y8NRDbZLMYd4Z”]The limited partners in the fund are projected to achieve a net IRR in the range of 10 percent to 13 percent. The amount of planned leverage to be placed on Fund V will be in the range of 65 percent.
San Francisco will likely be one of the targeted investment markets for Fund V. The other markets would include Seattle, Boston, Austin and Washington, D.C. These cities around the country do have some similar characteristics, which include strong economies, skilled workforces and substantial tenant bases that will benefit continued economic expansion and job growth for the future.
DivcoWest plans to buy a combination of office and R&D assets for Fund V. These would all be properties that are targeting technology or media-related companies.
All of the investments for the commingled fund would have a value-added component. Many of the transactions for Fund V would be acquiring existing assets. The planned improvements to the properties would include leasing up any empty space in the asset, a recapitalization or adding new management techniques. DivcoWest will also be making some equity investments into new development projects. The long-range plan for these assets is to eventually sell them to core buyers at some point in the future.