By Jon Peterson
New York City-based Rockwood Capital has put its acquisition of the Montague Corporate Center in San Jose into its Rockwood Capital Real Estate Partners Fund X. The total capital raise for this fund was $1.1 billion.
Rockwood bought the property in San Jose for $60.1 million, as stated by multiple sources familiar with the transaction. The real estate manager declined to comment as to what it had paid for the property.
Palo Alto-based Menlo Equities was the previous owner of Montague Corporate Center. On its Web site, it stated that office and R&D campus totals 257,780 square feet, and it sits on 15.81 acres. The property is located at 2520, 2540-2560, 2580-2584 Junction Avenue and 541-555 East Trimble Road.
The complex in San Jose is the only asset in the San Francisco Bay Area that the commingled fund owns at this time, according to an email received from Rockwood. The other assets are spread out across the country with three in New York and single assets in Los Angeles, El Segundo, Long Beach, Denver and Washington, D.C. These deals included some debt transactions and the purchase of a mixture of office, retail and apartments.
With these nine deals, Fund X is around 30 percent committed. Rockwood has been an active investor in the San Francisco Bay Area for a long time and is planning to continue with these efforts in the future. The company has a regional office setup in San Francisco on the 30th Floor of 50 California Street. The commingled fund has a value-added strategy targeting a mixture of office, residential, retail and hotels in urban and “suburban core” mixed-use environments in the United States.
The $1.1 billion capital raise for Fund X is $300 million more than Rockwood had planned for when it was raising the capital. A portion of the capital raise did come from a range of public pension funds around the country. This included $100 million from the Minnesota State Board of Investment, $60 million each from the Public Employees Retirement Association of New Mexico and Kentucky Teachers Retirement System, $50 million from the Illinois Municipal Retirement Fund and $40 million each from Kansas Public Employees Retirement System and the Nebraska Investment Council.
The limited partners in Fund X are projected to achieve a net IRR of 12 percent to 14 percent with an anticipated net equity multiple of 1.6 X to 1.8 X. The commingled fund will target growing and evolving neighborhoods for its investments. This will include areas driven by some combination of education, wealth and favorable population-based socioeconomic trends.
