By Jon Peterson
San Francisco-based Ellis Partners and New York State Common Retirement Fund have formed a new joint venture to invest in core real estate in the San Francisco Bay Area. The amount of equity coming from the pension fund is $200 million.
“We are honored to have this opportunity to continue our work with NYSCRF in this new long-term venture. We look forward to working with the Bay Area real estate investment community to identify well leased core assets with durable long-term cash flow in locations that reflect the Bay Area of the future,” says Melinda Ellis Evers, a managing principal with Ellis Partners, in a prepared statement.
“We are excited to be able to augment the scope of real estate investing we’ve been implementing for many years and look forward to building a world class portfolio for the third largest public pension fund in the U.S.,” says Jim Ellis, a managing principal with Ellis Partners, in a prepared statement.
New York Common considers Ellis Partners as a strong manager, and their relationship dates back to its initial investment in the firm 7 years ago. The pension fund wrote in an email that “Our relationship with Ellis dates back to 2012 when the emerging manager program was established. Through this program we have indirectly invested with Ellis in 5 projects in the San Francisco Bay Area that have significantly exceeded return expectations. Ellis’ long tenure and consistency as one of the best performing emerging managers has resulted in graduating to a direct relationship with the pension fund.”
The name of the new joint venture is EPNY Ventures I LLC, according to information provided by the pension fund. The expected leverage on the venture is 40 percent at the portfolio level. The targeted returns will be 8 percent to 10 percent on a gross basis.
Ellis will be looking to acquire core assets across the region. This will include a mixture of office, industrial and retail assets. New York Common expects that most of the assets for the venture will be middle market type of transactions.
With the commitment from New York Common, Ellis Partners now has capital sources targeting all of the risk levels for investing in real estate. This includes core, core plus, value-add and opportunistic assets that will range from buying existing properties to ground-up development projects.