By Jon Peterson
Portland, Ore-based Gerding Edlen Investment Management so far has placed two San Francisco Bay Area assets into its $416 million capital raise for the Gerding Edlen Green Cities III commingled fund, as stated by the manager in an e-mail.
One of the properties is the 127,246 square foot office building in Emeryville located at 1650 65th Street. The company paid $30.5 million for the property.
The other asset is a new apartment development project located at 1700 Webster in Oakland. The real estate manager will be building a 206-unit complex on the site. This asset is now under construction.
“The Oakland investment is very attractive. Gerding Edlen likes the Oakland market and the growth of the downtown for both job growth and for the attractiveness for residential living. The site of the development is three blocks from Lake Merritt and two blocks from the BART station making it an ideal and centrally located property for future residents to live, recreate and have easy access to transit,” said Molly Bordonaro, co-managing partner with Gerding Edlen.
These two assets are part of eight transactions that the manager has committed for the commingled fund. These properties make up 64 percent of the Green Cities III’s capital.
The overall San Francisco Bay Area is one of five targeted markets for Green Cities III. The others are Seattle, Portland, Chicago and Boston. The commingled fund will be focused on buying value-add investment opportunities that involve office buildings or apartments.
The equity raise of $416 million for the fund exceeded its original target of $350 million. One of the investors in the fund with a $50 million commitment was the Connecticut Retirement Plans and Trust Funds. The targeted returns for the commingled fund are a 14 percent net IRR.
There are two kinds of investments that Gerding Edlen will be looking for in Green Cities III. One is to acquire existing assets that can be retrofitted. It also will be placing equity investments into new development projects. Most of the properties will be located in urban high-growth markets.
There will be a significant amount of leverage placed on the commingled fund. As stated in a board meeting document from Connecticut, the fund’s targeted returns assume 60 percent leverage on the total cost of the acquisition/retrofit of a project, or the development of a new project, with a maximum 70 percent leverage on any one property.