3650 REIT Closes First Tranche of $950M Investment Vehicle

CalSTRS is a lead investor in the fund’s $580 million initial closing.
Image by Paul Fiedler via Unsplash.com

The California State Teachers’ Retirement System made significant lead investments in 3650 REIT’s $950 million Stable Cash Flow II fund, which had its first close with $580 million in institutional capital commitments. The firm did not identify other investors in SCF II but noted there had been strong investor interest in the fund.

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3650 did not disclose how much CalSTRS invested in the fund but did state there were large allocations from both its fixed income and real estate portfolios. As of November, CalSTRS had approximately $275 billion in assets under management.

The investment expands the relationship between the public pension fund giant and 3650, a nationwide lender that originates and manages portfolio commercial real estate loans for institutional investors. In August 2018, CalSTRS and the recently launched 3650 REIT formed a $500 million joint venture, according to IPE Real Assets. CalSTRS initially invested $250 million in the joint venture with the remaining investment to follow at a later date. Jonathan Roth, co-founder & managing partner of the Miami-based firm, said in a prepared statement about SCF II that they were excited to build on the existing joint venture with CalSTRS and anticipated making further investment announcements in the near future.

Roth noted CalSTRS recognized the investment advantages of 3650’s private, direct lending approach that provides tailored portfolio financing products to best-in-class commercial real estate owners and operators across U.S. markets. On behalf of its institutional investors, 3650 holds and manages each loan in its portfolio through maturity. Since it was launched in 2018, 3650 has closed more than $640 million in its bridge and event-driven lending strategy and $2.7 billion in its long-term, stable cash flow strategy. 3650 officials said they are beginning 2021 with a strong pipeline of origination opportunities across the platform.

Justin Kennedy, co-founder & managing partner, said even as the pandemic begins to come under control, 3650 and CalSTRS believe their cautious, hands-on approach through the term of each loan will be critical as commercial real estate markets adjust to shifting demand across asset types and geography.

Toby Cobb, co-founder & managing partner stated 3650’s portfolio performance through the pandemic demonstrated the fundamentals of its lending model works for its borrowers and investment partners. He added having investors of CalSTRS’s caliber was further validation of the firm’s lending strategy.