DivcoWest Plans $2B Capital Raise for Next Commingled Fund, Will Target Bay Area Assets

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By Jon Peterson

San Francisco-based DivcoWest will be targeting a $2 billion capital raise for its DivcoWest Fund VI commingled fund, according to a board meeting document from one of the initial investors into the investment vehicle.

This investor is the Massachusetts Pension Reserves Investment Management Board, a pension fund that serves the state of Massachusetts state employees and teachers. This pension fund had approved a $200 million commitment into the DivcoWest fund. Another recent investor into the fund is the Teacher Retirement System of Texas, according to information provided by the pension fund. The Texas pension fund invested $100 million with DivcoWest into the new investment fund.

DivcoWest declined to comment when contacted for this story.

Two of the markets where DivcoWest will focus its capital investment will be the San Francisco Bay Area and Seattle. Other regions around the country that the manager wants to find deals in will include Boston, Los Angeles, New York City and Washington, D.C.

The manager continues to believe that these markets are areas characterized by strong economies, skilled workforce and substantial tenant base that will benefit from continued economic expansion and job growth. 

The new commingled fund VI will exceed DivcoWest’s fund V by almost $500 million, if the new capital raise reaches its target. For fund V, DivcoWest raised $1.58 billion and had a final close in September 2017.

Most of the capital for the commingled fund will be investing in office buildings. However, the fund does have the option to invest in some industrial assets. Strategically, the focus will be to acquire value-add, existing properties that the investor can improve during the life of the commingled fund.

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