By Jon Peterson
San Francisco-based Swift Realty Partners is getting very close to establishing approximately a $1 billion investment fund. This commingled fund is called Swift Realty Estate Partners Fund I.
The company has now attracted a total of $310 million equity, according to industry sources. The final equity tally could be as much as $330 million. The leverage component on the commingled fund would be capped at 65 percent.
Swift Realty declined to comment when contacted for this story. The total equity raised was significantly higher than either of its original target and the hard cap that were established prior to the start of the capital raise. The real estate investment company had planned a $250 million original target for an equity raise with a hard cap of $300 million.
The success that Swift has had with fundraising for its first fund is not usual for the institutional capital raising marketplace. Many first time real estate managers have a hard time reaching their initial targets. The trend over the last several years for investors has been to award capital to managers with more a longer and successful track record with their multiple investment funds, according to industry sources.
Swift Realty has attracted a wide range of investors into the commingled fund. The Teacher Retirement System of Texas made a $15 million commitment into the fund through the pension fund’s emerging manager investment strategy. Other investors include Credit Suisse as well as endowments of major universities around the country.
Fund I has a value-add investment strategy, and the targeted returns for the commingled fund are in the high teens. The investment period for the fund is three years, and it has a total life of seven years with a number of extension options.
Swift Realty will only be investing in existing assets for Fund I. These will include a mixture of office and industrial properties. The commingled fund has a West Coast region investment focus. This could range from Seattle down to San Diego. The deal size for the fund could be as small as $5 million as well as include some very large transactions.
The only asset in the commingled fund at this time is located in the San Francisco Bay Area. In October of last year, Swift Realty paid $20 million to acquire the 77,000 square foot Corporate Terrace office building in Lafayette. The cap rate on this deal was 7 percent, based on the current net operating income. The goal with this asset is to increase occupancy and rents in the future.
Swift Realty has four new deals that it hopes to close over the next few weeks.
Photo by Laura Kudritzki