Home AEC Bain Capital and REDCO Development form Joint Venture with up to $250MM...

Bain Capital and REDCO Development form Joint Venture with up to $250MM of Equity

Fifth Wall, Gecina, MERLIN Properties, British Land and SEGRO, Kenedix and Mitsubishi Estate, Keppel Corporation, CBRE, Cushman & Wakefield, D.R. Horton, Equity Residential, Essent, Hines, Host Hotels & Resorts, Hudson Pacific Properties, Lennar, Macerich, Marriott International, Metlife Investment Management, News Corp, PulteGroup, Starwood Capital, Related Companies, Toll Brothers

By Jon Peterson

Boston-based Bain Capital Real Estate and Palo Alto-based REDCO Development have formed a new joint venture that will be focused on investment opportunities in the San Francisco Bay Area and Seattle regions. The venture has committed to spending $50 million on a number of deals anticipated to close over the next 60 days, and long-term the equity seeded in the venture could reach $250 million.

The venture has already identified a property deal worth $10.25 million for the acquisition of 922 South Claremont Street in San Mateo, a transaction set to close on June 20th. This investment involves the purchase of an existing 30,000 square foot building and land for the potential to add another 30,000 square feet to the asset in the near future.

“We are planning to have this property be leased to a single tenant. So far, we have already heard from both technology and venture capital firms about our property. We think that the downtown office market in San Mateo could become the next Redwood City from a demand standpoint. Our property has the benefit of [users] being able to walk to the Caltrain station to give employees the access of public transit to reach both Silicon Valley and San Francisco,” said Chris Freise, managing partner and co-founder of REDCO Development.

The seller of the property in San Mateo is Wall Street Properties, which had owned the asset for a long time. The seller had actually completed some entitlement work on its own for a planned expansion. “We are planning to make some minor changes to our design before we go for our entitlements,” said Freise.

The overall leverage on the relationship will be somewhere in the range of 60 percent to 65 percent, and the property types targeted for the venture are both office and industrial. The venture will likely focus on a number of value-add projects for infill industrial development whether with existing assets or by acquiring land for new development.

Bain Capital Real Estate is an active real estate investor. This company was formed in 2018 when the team from Harvard Management Company’s real estate investment unit joined Bain Capital.

The team at Harvard had invested $3.4 billion of equity into 380 real estate transactions from 2010 to 2017. These investments were made on behalf of the Harvard University Endowment’s real estate allocation for a non-core investment strategy.