REAL STATE - The California Public Employees Retirement System has finalised plans for a new office building investment partnership. It’s called Fifth Street Properties II, LLC.
The venture has a total of $2bn of capital available to invest. The total amount of equity in the program is around $1 billion. The vast majority of capital is being provided by CalPERS. There is 50% leverage being implored in the investment program.
The real estate manager for the venture is CommonWealth Partners. Its President Brett Munger said, "We are glad to have this new partnership setup and can go out into the market and be looking for deals."
The real estate manager is now looking at its first transaction. This is an asset in Beverly Hills, Calif. A closing should be happening before the end of the year.
The investment strategy for the partnership is to invest in office buildings. This could be a wide variety of deals. Munger said, "We have the capability to structure transactions that range the entire scope from core to ground up development." This could mean buying existing assets to investing equity in new development projects.
CommonWealth Partners was also the manager for Fifth Street Properties I, LLC. There will be some differences for the second venture. One of the major differences will be geographical. The first venture was only investing in the west and southwest markets in the United States. The second fund can now look for assets all over the country. It also can be an international player. Up to 25% of the portfolio can be invested in office buildings in Canada and Mexico.
CommonWealth Partners could also be a player in a public to private real estate deals for Fifth Street Properties II. The real estate manager did have some talks earlier this year with Equity Office Properties Trust about doing a transaction. A deal was never worked out.