By Jon Peterson
Los Angeles-based Gaw Capital Advisors has put both San Francisco and Seattle among its target markets for its Gaw U.S. Fund III commingled fund, as stated in a board meeting document from the Ohio Bureau of Workers Compensation Fund.
This investor approved a $50 million commitment into the fund at the end of December. It has joined other institutional investors in the fund where a final $400 million capital raise is anticipated to occur during the first quarter of 2018. Another investor in the fund with a $50 million commitment is the San Francisco Employees Retirement System.
Fund III is substantially focused on the Western United States for transactions for the fund, as stated in a board meeting document from the Ohio BWC. Besides San Francisco and Seattle, the other growth markets earmarked for the fund are Los Angeles and Portland. Gaw will also consider other markets such as Denver and Nashville.
The investment strategy for Fund III will center on the acquisition and repositioning/redevelopment of “creative office” and “creative hospitality” assets that is primarily populated by young, well-educated demographics and experiencing strong employment growth. Gaw looks to take advantage of operating underperforming B-quality assets located in high-growth areas and turn them into A-quality assets in A-quality locations.
The real estate fund manager will be making a $12 million co-investment into Fund III. This will represent around three percent of the commingled fund’s total capital commitments. The amount of leverage planned on the commingled fund is projected to be 65 percent of the aggregate investment fair market value.
The targeted returns for the fund are a 12 percent net IRR. The investment period for the fund will be three years from the final closing with a one-year extension option. The total life of the fund is for eight years with two one-year extension options.