By Jon Peterson
San Francisco-based DivcoWest Properties has reached a total equity raise so far of $2.1 billion for its commingled fund DivcoWest Fund VI, according to a filing with the Securities and Exchange Commission. This capital raise is still not completed, however. The fund had a $1.5 billion of equity capital raising target and a $2.25 billion hard cap.
DivcoWest declined to comment when contacted for this story.
The real estate fund manager has attracted capital from some of the largest public pension funds in the United States. One of these was the California State Teachers Retirement System (CalSTRS), which has made a $325 million commitment into the fund. Other investors in the fund include Massachusetts Pension Reserves Investment Management Board, Oregon Public Employees Retirement Fund, New Jersey Division of Investment, Teacher Retirement System of Texas and the District of Columbia Retirement Board.
The capital raising success by DivcoWest has been achieved in a difficult economic environment, according to industry sources. Many pension funds and other institutional investors have delayed or are putting off making any new commitments for investment into the real estate market. Some of these would like to wait until at least the end of the third quarter or sometime in the fourth quarter of this year in order to evaluate the financial impact of COVID-19 on the industry.
DivcoWest has long been an active investor in both the San Francisco Bay Area and Seattle markets. These are two of the targeted markets for the commingled fund. Some of the manager’s other active areas around the country include Boston, Austin, New York City and Washington, D.C.
The preferred returns for the limited partners in the commingled fund are 7 percent, as stated in a board meeting document by the New Jersey Division of Investment.
Fund VI is known as a value-add commingled fund. A variety of strategies for assets in the fund will include repositioning, releasing and redevelopment of properties. The assets acquired for the fund will include a combination of office buildings, R&D assets and lab properties. The main tenants that occupy the properties will include technology firms and life science types of businesses.