DivcoWest, CalSTRS Partner on $300M Investment

The strategy of the joint venture will focus on purchasing core and core plus commercial real estate assets in growth-oriented markets throughout the U.S.
Riverpark Tower II in San Jose, Calif.
Riverpark Tower II in San Jose, Calif.

DivcoWest Real Estate Services has entered into a $300 million joint venture with the California State Teachers’ Retirement System. The partnership will focus on purchasing core and core plus commercial real estate assets in growth-oriented markets throughout the U.S.

DivcoWest and CalSTRS enjoy a 15-year history of investing together, with DivcoWest having invested more than $1.5 billion that CalSTRS committed into various investment vehicles. Over the years, DivcoWest has invested CalSTRS capital across various asset classes, return profiles, and investment structures, including commingled funds, joint ventures and separate accounts.

“We continue to commit capital to DivcoWest not only because of our partnership’s financial success, but because they’ve earned our trust over a long period of time,” Mike DiRé, CalSTRS’ director of real estate, said in a prepared statement. “They’ve built their professional management style on transparency and integrity-which is especially significant to CalSTRS, as we’re a public pension fund.”

Designs on strong cities

For this new venture, the investment activities will also focus on markets with substantial tenant bases in dynamic, new economy industries. Among the cities that fall into this are San Diego, Calif., San Francisco, Los Angeles, Seattle, Boston, New York and Austin, Texas.

“In addition to an outstanding investment return history, DivcoWest’s deep knowledge and expertise in their target markets, excellent relationships with innovation and technology leaders and the strength and quality of their team make them an ideal partner for CalSTRS,” Don Palmieri, CalSTRS’ portfolio manager in real estate, said.

According to DiRé, CalSTRS benefits from DivcoWest’s expertise and leadership in providing and managing commercial space to the innovation and technology communities. Last September, CalSTRS acquired buildings E, F and G of Campus @ 3333, one of the biggest California office deliveries in 2017.

DivcoWest now has nearly $5.4 billion in assets under management. In September, DivcoWest held its final close on DivcoWest Fund V, raising $1.6 billion in commitments for investment in value-add office and R&D assets. That fund became its largest fund ever.

Image courtesy of Yardi Matrix