The Massachusetts Pension Reserves Investment Management Board (Mass PRIM) has made its first-ever direct real estate deal, investing $112m (€107m) in Silicon Valley.

The $62bn pension fund made the direct acquisition of 21 acres of land, home to three office buildings, as part of a drive to reduce investment costs.

Michael Trotsky, executive director and chief investment officer, said: “By purchasing and owning this land directly rather than through an investment manager, PRIM stands to save approximately $11m in investment-management fees over the next 20 years.”

The deal is part of the pension fund’s Project SAVE programme, which Mass PRIM said has reduced its fees and costs by an annualised $146m.

DivcoWest Properties brought the potential transaction to PRIM’s attention and advised on the purchase.

Timothy Schlitzer, head of Mass PRIM’s $6.5bn real estate programme, said: “DivcoWest has been a high-performing partner for PRIM in this and other extremely successful investments, including One Kendall Square in Cambridge (Massachusetts) and 333 Bush Street in San Francisco.”

Earlier this year, Mass PRIM committed $100m to DivcoWest’s latest real estate fund.

Stuart Shiff, chief executive of DivcoWest, said: “We are thrilled to be building on our relationship with PRIM in a strategic product type that we believe offers a very attractive risk-return profile as a long-term investment.”

The City of Santa Clara sold the land and a related ground lease at 5451-5455 Great America Parkway to Mass PRIM.

Three class-A, five-storey office buildings totalling 449,000sqft were built on the land in 2013 and are leased to technology companies, including Dell and Arista.

They were built by The Irvine Company, which owns the buildings and is leasing the land from Mass PRIM under a 64-year contract that extends to 2081. Mass PRIM will own the buildings at the conclusion of the contract.