By Jon Peterson
San Francisco-based Shorenstein Properties has completed its latest capital raise totaling $1.22 billion for its Shorenstein Realty Investors Eleven limited partnership, according to a spokesperson for the real estate firm. The company had a $1.25 billion hard cap for the capital raise.
The real estate fund manager is expected to have its first property bought for the commingled soon, according to sources familiar with the company.[contextly_sidebar id=”0rtvtTqo1QiWLHC7vII20GvN0amGgLs5″]The San Francisco Bay Area is planned to be one of its key investment markets, which is not surprising. According to the company’s Web site, the fund manager owns several large projects in the region, including San Francisco, South San Francisco, Oakland, Redwood City and Santa Clara.
Shorenstein typically attracts a wide range of investors for its commingled funds. These would include a mixture of pension funds, family offices, foundations and college and university endowments. Around 6 percent of the capital raise, or $75 million, came from Shorenstein itself in the form of a co-investment into the commingled fund.
Realty Investors Eleven has a national investment strategy. The markets it will be buying outside of the San Francisco Bay Area should include Chicago, Boston, Minneapolis, Houston, Seattle, Austin, New York City, Denver and Los Angeles.
The commingled fund has a value-added investment strategy. It typically looks to acquire office buildings or mixed-use properties that might include a predominant office with either a retail or residential component.
Shorenstein looks to buy properties that are well located and have a vacancy or other issues that the manager can address using its in-house leasing, management, construction and capital expertise. The long-range plan for the investment vehicle is to sell each property once it becomes stabilized and can be sold in the marketplace to players looking for a core asset.
The total capitalization for Realty Investors Eleven comes over $3 billion. This will be accomplished as the commingled fund will have a leverage component somewhere in the range of 60 percent to 70 percent.
Shorenstein has had some recent activity buying and selling assets outside of the San Francisco Bay Area. For its Realty Investors Ten commingled fund, it paid $100 million to acquire the 1.1 million square feet Washington Square in Minneapolis. It also is under contract to sell the 229,383 square foot 399 Boylston Street in Boston for $117 million for Realty Investors Eight.